SEC Pushes for Flexible Crypto Custody Rules to Boost Innovation
1min read During a recent roundtable discussion, the U.S. Securities and Exchange Commission (SEC) underscored the pressing need for clear and adaptable regulations governing the custody of cryptocurrencies. The event, spearheaded by SEC Commissioner Hester Peirce, convened industry experts to tackle the current regulatory ambiguities that have impeded innovation within the crypto space.
Commissioner Peirce stressed the necessity of transitioning from antiquated "physical possession" custody rules to more flexible, principles-based standards. She pointed out that the varied nature of crypto assets necessitates a regulatory framework capable of supporting different custodial models. This transition is vital for cultivating a more innovative and competitive landscape within the crypto industry.
The roundtable discussions were part of a larger initiative by the SEC to gather insights from industry stakeholders and inform future policy decisions. The SEC's new leadership, under Chairman Paul Atkins, has demonstrated a readiness to address long-standing issues in crypto regulation. Atkins acknowledged that regulatory uncertainty has hindered innovation in recent years and pledged to establish a clearer regulatory framework for crypto assets.
Atkins commended Peirce for her advocacy of sensible crypto policies and her leadership in developing a rational regulatory framework. He also highlighted the potential advantages of blockchain technology, including enhanced efficiency, cost savings, transparency, and risk management. The Chairman's remarks indicate a notable shift in the SEC's approach to crypto regulation, moving away from the previous stance under former leadership.
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The discussions also explored the current "special-purpose broker-dealer" model and whether it adequately meets the needs of market participants. Atkins questioned whether a new model might be required for crypto asset broker-dealers, suggesting a potential for increased collaboration between the SEC and the crypto sector under his leadership.
The roundtable's emphasis on crypto custody rules is part of a broader effort to address the regulatory hurdles faced by SEC registrants when attempting to custody crypto assets for customers. The discussions highlighted the need for clear guidelines that can help institutions navigate the complexities of crypto custody while ensuring compliance with federal securities laws.
In summary, the SEC's recent roundtable discussion, led by Commissioner Hester Peirce, emphasized the need for clear and flexible crypto custody rules. The new leadership under Chairman Paul Atkins has shown a commitment to addressing regulatory uncertainties and fostering innovation in the crypto industry. The discussions underscored the importance of moving away from outdated custody rules and developing a principles-based regulatory framework that can accommodate the diverse nature of crypto assets. This shift in approach is expected to encourage the growth of the digital assets market and promote greater collaboration between the SEC and the crypto sector.
