SEC May Scrap Crypto Custody Rule Amid Industry Concerns

Highlights:

• The SEC may withdraw a crypto custody rule after strong opposition from industry groups and advisers.
• The SEC under Trump has eased crypto regulations and dropped several enforcement actions against major firms.
• Paul Atkins may soon replace Mark Uyeda as SEC chair after delays linked to financial disclosure issues.

The US Securities and Exchange Commission is considering changing or scrapping the crypto custody rule that was proposed under the Biden administration. At a San Diego investment conference, Acting SEC Chair Mark Uyeda mentioned how industry groups had raised concerns about the proposed rule.

🚨 JUST IN: 🇺🇸 The SEC may drop Gensler’s crypto custody crackdown!

🏛 A game-changer for exchanges & institutions? pic.twitter.com/ZP9ryaDx3c

— The Moon Show (@TheMoonShow) March 18, 2025

The rule, championed by former SEC Chair Gary Gensler, aimed to broaden federal custody standards to encompass digital assets like cryptocurrencies. Under this rule, investment advisers would have put client crypto assets into custody. In particular, the custodian had to be a federally or state-chartered bank. Uyeda stated that these concerns may be major challenges to moving the proposal forward. In addition, he has instructed the SEC staff to explore other options, such as withdrawing the rule entirely.

The SEC leaned on enforcement rather than coming up with favorable rules for the industry. After he resigned, the agency took a different approach under the current administration. Uyeda noted that the SEC’s crypto task force would work closely with staff to evaluate the next steps, reflecting the ongoing debate over how the SEC should regulate crypto custody requirements.

Trump-Era SEC Rethinks Gensler-Era Crypto Oversight

Since President Trump took office, the SEC has begun to reverse several policies that were introduced during Gensler’s time at the agency. The SEC also has pushed back on rules that would have broadened the definition of “exchanges.”

Moreover, under Trump’s SEC leadership, they have reversed the Staff Accounting Bulletin (SAB121). The rule had earlier called for firms to list crypto in their balance sheets as liabilities. The agency has also dropped cases against Coinbase, Gemini, and other exchanges. These moves to drop the case are part of a broader strategy to create a more collaborative relationship between the SEC and the crypto sector.

Atkins Likely to Succeed Uyeda Amid Delayed Confirmation

In a related development, former SEC Commissioner Paul Atkins is almost becoming the next chair of the agency. He is reportedly set to be grilled by a Senate committee at the end of the month.

President Trump nominated Atkins in December to succeed Uyeda. However, his confirmation has faced delays due to financial disclosure complications linked to his marriage to a billionaire family. The Senate Banking, Housing, and Urban Affairs Committee is also planning a bipartisan meeting on Atkins’ nomination on March 21, which could help move the process forward.

If confirmed, Atkins is expected to take a more friendly approach to regulating the industry. He previously served as an SEC commissioner from 2002 to 2008. While delays in confirming new SEC chairs are not uncommon, the extended timeline has attracted attention, considering the impact its leadership will have on crypto oversight.

Uyeda has been acting chair since Gensler’s departure, and has already taken numerous policy moves. Recently, he established a crypto task force led by Commissioner Peirce to better work with the industry.