SEC Considers Withdrawing Crypto Custody Rule for Investment Advisers

The U.S. Securities and Exchange Commission (SEC) is contemplating the withdrawal of a proposed rule on crypto custody for investment advisers, as indicated by acting SEC chair Mark Uyeda. This potential change is part of a broader review of regulations implemented during the Biden administration. Uyeda has directed his staff to scrutinize the rule, which was proposed to bolster the protection of digital assets held by investment advisers. The rule aims to ensure that these assets are safeguarded against theft, loss, or misuse, and that advisers have the necessary controls in place to manage them effectively.

The proposed rule has sparked debate within the crypto industry. Some argue that it imposes unnecessary burdens on investment advisers, while others view it as a crucial step to protect investors in the rapidly evolving digital asset market. The SEC's decision to review the rule could signal a shift in the regulatory approach to crypto assets, potentially leading to changes that either ease or tighten the requirements for investment advisers.

Uyeda's recent remarks come after he mentioned on March 10 that he had asked SEC staff to explore options for abandoning part of a proposal that would require some crypto firms to register with the regulator as exchanges. This move aligns with the broader effort by the SEC to reassess and potentially revise regulations that were put in place during the Biden administration. The review aims to ensure that the regulatory framework is effective, efficient, and aligned with current market conditions and technological advancements.

The potential withdrawal of the rule is part of a broader effort by the SEC to reassess and potentially revise regulations that were put in place during the Biden administration. This review is aimed at ensuring that the regulatory framework is effective, efficient, and aligned with the current market conditions and technological advancements. The SEC's actions in this regard will be closely watched by the crypto industry, as well as by investors and other stakeholders who have a vested interest in the regulation of digital assets.