The SEC is reconsidering a proposed rule that would impose stricter requirements on how investment advisors handle cryptocurrency custody.
Initially introduced in early 2023, the rule aimed to ensure digital assets were stored with qualified custodians meeting specific legal standards. However, strong industry opposition has led the agency to revisit its approach.
Speaking at a financial conference in San Diego, Acting SEC Chairman Mark Uyeda acknowledged concerns from industry participants, suggesting that the original plan might be difficult to implement. He has directed SEC staff to collaborate with the crypto task force to explore alternative solutions.
The rule, first introduced during Gary Gensler’s tenure, was designed to expand existing custody regulations to cover crypto. Critics, however, argue that the proposal would limit banking options for crypto firms and make custody services harder to access.
Under current SEC guidelines, investment advisors must store assets with regulated financial institutions such as banks or brokerage firms. Extending this requirement to crypto has sparked backlash from lawmakers, financial organizations, and the digital asset industry, with groups like the American Bankers Association warning of potential disruptions.
With mounting pressure from Congress and industry leaders, the SEC is now reassessing its stance, indicating that changes to the rule may be on the way.
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