US SEC’s Crypto Custody Rule May Get the Axe! Here’s Why

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US SEC’s Crypto Custody Rule May Get the Axe! Here’s Why

Well, well, well. It seems like the US Securities and Exchange Commission (SEC) has finally realized that perhaps their crypto custody rules, proposed under the Biden administration, could be a tad bit more trouble than they’re worth. The SEC’s acting chair, Mark Uyeda, has let it slip that the agency is going to give this whole rulemaking process a fresh look. And let’s be honest, it’s probably about time. 😅

Crypto Custody Rule Proposal Could Be Abandoned

At the swanky 2025 Investment Management Conference (because who doesn’t like a good conference?), Uyeda took the stage and gave us the lowdown on the SEC’s new approach to rulemaking. Basically, he said they’re going back to basics—ya know, something simple, like reading the fine print and not rushing into things like a teenager with their first car. 🚗💨

During the Monday shindig, Uyeda told the crowd that the SEC’s goal is to prioritize “effective and cost-efficient regulations” that actually make sense, which I’m sure left everyone wondering, “Wait, you mean you haven’t been doing that already?” 😜

Now, if the SEC gets their act together, they might go so far as to revisit or even scrap some of the proposals they’ve put on the table. Among the controversial ones? The 2023 crypto custody rule that had everyone in the industry clutching their pearls. 😱

Back in February 2023, Gary Gensler and his merry band at the SEC decided to shake things up by suggesting an amendment to the 2009 Custody Rule. The idea was to have “qualified custodians” (banks, brokers, etc.) hold onto assets for investment advisers. Seems fine, right? Well, here’s where things got interesting: the proposed rule would now include crypto, which, as you can imagine, caused a bit of a ruckus. 🧐

Uyeda himself called out the proposal, saying it could “mask a policy decision to block access to crypto as an asset class” and that it was straying from the SEC’s old “neutral” stance on investments. Guess that didn’t sit well with him! 😏

Fast forward to Monday, and Uyeda basically said, “Yeah, we might just pull the plug on that original proposal. Let’s be cautious here.” He even told the SEC staff to chat with the Crypto Task Force to figure out if they should drop the whole thing like a hot potato. 🥔

And just for fun, he tossed in that the SEC might extend or delay compliance dates for some of their other rules. Because why rush into making the same mistakes twice, right? 🤦‍♂️

US SEC Returning To A ‘Smoother’ Regulatory Approach

On a side note, Uyeda didn’t mince words when it came to criticizing the previous administration’s rulemaking process. Apparently, those “rulemaking shortcuts” were not exactly a winning strategy and have now come back to haunt the Commission like a ghost at a family reunion. 👻

“The Commission should act like a super-sized freighter, not a speed boat.” In other words, slow and steady wins the race. I mean, it’s about time the SEC learned that rushing is for amateurs. Investors and the industry deserve a thoughtful, deliberate approach, not one that feels like a game of ‘whack-a-mole.’

So, what’s the bottom line? Uyeda says they’re going to take their time and actually think things through. After all, hasty decisions tend to end badly, and who has the time for that kind of embarrassment? 🤷‍♂️

Oh, and just to put the icing on the cake, the SEC has been making moves to slow down their involvement with crypto, thanks to the changes under the Trump administration. Lawsuits and investigations against crypto bigwigs like Binance and Coinbase? Yeah, those are mostly on hold. Guess the SEC’s finally decided that maybe, just maybe, a little less action might actually be more productive. 😏

In case you missed it, even Commissioner Hester Peirce (the crypto-loving SEC member) has hinted that they’ll be rolling out “pieces” of a new framework this year. Let’s just hope it’s more ‘plan’ and less ‘guessing game.’ 🤞

Crypto chart showing trend

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2025-03-19 12:44