SEC Chair Advocates for Crypto Self-Custody Flexibility

SEC Chair Paul Atkins recently expressed a more open stance on crypto self-custody during the SEC’s final Crypto Task Force Roundtable, titled “DeFi and the American Spirit.” Atkins emphasized the importance of self-custody as a foundational American value, stating that it should not be compromised when engaging with digital assets. He advocated for greater flexibility for market participants to self-custody crypto assets, particularly where intermediation imposes unnecessary costs or restricts activities like staking.

Atkins also criticized the previous administration's approach to crypto innovation, noting that treating software developers like financial brokers hindered technological progress. This shift in tone has reignited debates around past regulatory actions, particularly the ongoing legal battle between Ripple and the SEC over XRP.

Some users questioned the fairness of the SEC's actions against Ripple, suggesting that the company should be freed from the SEC's hold. Former SEC official Marc Fagel responded by clarifying that Ripple was penalized for an illegal securities offering, resulting in a $125 million penalty and an order to prevent future violations. Fagel noted that if Ripple wishes to challenge these outcomes, it would need to return to court.

Despite the evolving stance of the SEC, some believe that Ripple is still being unfairly restricted. The SEC vs. Ripple case is nearing its conclusion, with a deadline of June 16 for the SEC to file a status report to the Second Circuit on the settlement’s progress. The final judgment, which could lift the injunction and formally end the case, is pending approval from Judge Torres and the Second Circuit.

Atkins' comments come at a critical time as Congress debates various crypto bills, some of which could restrict self-custody. The SEC Chair's strong stance on personal crypto wallets may complicate efforts by lawmakers to impose a complete ban. Atkins urged against automatically fearing the future, emphasizing the need for a balanced approach to crypto regulation.