The U.S. Securities and Exchange Commission (SEC) is reconsidering its stance on a set of regulations proposed during the Biden administration, which would have imposed stricter standards on investment advisors responsible for holding custody of cryptocurrencies and other assets. Mark Uyeda, the SEC’s acting chair, revealed on Monday that the agency is contemplating changes or even the scrapping of these proposed rules.
During his speech at an investment industry conference in San Diego, Uyeda outlined potential shifts in regulatory policy, signaling a divergence from the previous administration’s approach to Wall Street oversight. He emphasized that the SEC’s focus would now be on ensuring “effective and cost-efficient regulations” while staying within the boundaries of its statutory authority. This represents a significant change from the more aggressive regulatory stance taken under former President Biden’s leadership.
The proposed custody rule, introduced two years ago with Uyeda’s backing, was designed to ensure that investment advisors could not “use, lose, or abuse” their clients’ crypto assets. However, public feedback has raised concerns about the broad scope of the rule, prompting the SEC to reconsider its approach.
Additionally, Uyeda discussed the SEC’s recent changes to the reporting requirements for mutual and exchange-traded funds. The rule, which mandates more frequent monthly reports on portfolio holdings, was introduced by former SEC Chair Gary Gensler in August. Despite Gensler’s argument that the rule would promote greater transparency, the increased reporting frequency has been met with resistance from industry stakeholders. Commenters expressed concerns, particularly in light of advancements in artificial intelligence, which have heightened fears about the cost and complexity of compliance. Uyeda indicated that the SEC may extend the deadline for compliance as it weighs these concerns.
As the SEC moves forward with its agenda, Uyeda also touched on the upcoming leadership change, with former SEC Commissioner Paul Atkins slated to take over as SEC Chair. However, confirmation hearings for Atkins are yet to be scheduled by the Senate. The agency is also grappling with pressure from the White House to reduce its staff, although specific plans have not yet been disclosed.
These developments signal a shift in the SEC’s regulatory approach, which may have significant implications for the future of cryptocurrency regulation and transparency in the investment industry.
