The securities watchdog continues to review policies that have hindered crypto growth
The US Securities and Exchange Commission (SEC) may be preparing to roll back a proposed rule that would have imposed stricter custody requirements on cryptocurrency held by investment advisers. Acting SEC Chair Mark Uyeda indicated that the rule, introduced in early 2023 under the Biden administration, has raised significant concerns among industry stakeholders, leading to discussions on whether it should be modified or withdrawn altogether.
Acting Chairman Mark T. Uyeda delivered keynote remarks at ICI’s Investment Management Conference today. https://t.co/W6sYt92mGb pic.twitter.com/zBdKIJNHNF
— U.S. Securities and Exchange Commission (@SECGov) March 17, 2025
During an investment industry conference in San Diego, Uyeda acknowledged that the proposal’s broad scope has made it difficult to move forward as originally planned. The rule sought to require investment advisers to use only qualified custodians for holding client assets, including cryptocurrencies.
However, critics argued that the restrictions were overly burdensome and could discourage legitimate investment in digital assets. Uyeda has now directed SEC staff to explore possible alternatives, including the potential scrapping of the rule entirely.
The proposal was initially championed by former SEC Chair Gary Gensler, who argued that crypto firms should not be relied upon as custodians due to the risks associated with their operations. This stance faced pushback from industry groups, as well as some within the SEC itself.
Commissioner Hester Peirce was the only member to vote against the rule, warning that it could limit the number of qualified custodians available while expanding regulatory oversight in an unbalanced manner. Uyeda also expressed skepticism but ultimately supported the proposal with reservations.
This shift comes amid broader regulatory changes under the new administration. The SEC has already repealed a rule requiring financial firms to classify crypto holdings as liabilities, known as SAB 121. With former SEC Commissioner Paul Atkins expected to take over as SEC Chair, further revisions to crypto-related policies could be on the horizon.
