Story Highlights
- SEC considers withdrawing crypto custody rule amid regulatory concerns.
- Uyeda signals possible revisions, delays, or complete withdrawal of the rule.
- Industry leaders and lawmakers push back against stricter crypto regulations.
The U.S. Securities and Exchange Commission (SEC) is reconsidering its proposal to tighten cryptocurrency custody requirements. Acting Chairman Mark T. Uyeda addressed this issue during a conference in San Diego on Monday. He recognized the great obstacles ahead for the February 2023 regulatory proposal.
Investment advisors who register with the SEC must safely store cryptocurrency assets through qualified custodial services. The new guidelines enhance the security systems for asset protection. Despite this, Uyeda remained doubtful regarding the potential success of the measure. Such concerns may present substantial barriers to move forward with the original proposal, according to his opinion. The SEC staff members will work alongside the cryptocurrency task force in order to develop alternative solutions according to his statement.
SEC Faces Pressure to Revise Crypto Custody Rule
Uyeda dedicated his address to covering how the SEC operates during rulemakings. Uyeda proposed that the agency could take one of three actions including the total withdrawal of the rules or postponement of their implementation dates or revision of their specific requirements. SEC introduced this custody rule when Gary Gensler served as SEC director during the Biden administration. The proposal intended to extend current custody requirements toward total advisor-held assets which included digital currencies.
Investment advisors need to put client assets into storage with authorized institutions such as banks or brokerage firms. The proposed rule demands cryptocurrency holdings to be included in compliance with these requirements. The measure has generated worries among legislative bodies together with banking institutions and key figures from the digital asset sector. The regulation might deter multiple banks from offering services to crypto firms.
The American Bankers Association says that the proposal could weaken financial market stability. The suggested rule according to its critics, would deter institutions from crypto participation, leading to increased regulatory complexities.
The SEC made a move to adjust its approach after it encountered increased resistance from both Capitol Hill representatives along industry professionals. The SEC’s representative, Uyeda, suggests that the agency plans to either update its current rule or seek different regulatory approaches.
The fate of cryptocurrency custody regulation rules remains unknown at this time. Changes in the regulatory framework seem likely because the SEC indicates it is ready to examine their rules differently. The forthcoming resolution will have a major effect on both the financial market and the digital asset sector.
