In a twist that could only be described as a bureaucratic ballet, the US Securities and Exchange Commission (or SEC, for those who prefer acronyms to actual words) is contemplating the possibility of either changing or completely scrapping a rule that was proposed under the Biden administration. This rule, which aimed to tighten the crypto custody standards for investment advisers, has been met with more skepticism than a cat at a dog show, according to the agency’s acting chair, Mark Uyeda.
During a rather riveting investment industry conference in sunny San Diego on March 17 (where the sun shines brighter than the hopes of crypto investors), Uyeda delivered his prepared remarks. He noted that the rule, which was proposed back in February 2023, had garnered a plethora of comments expressing “significant concern” over its “broad scope.” One might say it was as broad as the Mississippi River, but with fewer fish.
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This meant that investment advisers would have to custody their clients’ crypto with a qualified custodian. Gensler, in his infinite wisdom, declared that investment advisers “cannot rely on” crypto platforms as qualified custodians due to their rather unique operational methods. It’s like trusting a raccoon to guard your trash—just not a good idea.
The proposal stirred up more friction than a cat on a hot tin roof, particularly with Uyeda and Commissioner Hester Peirce, along with various industry advocacy bodies who claimed the rule was as unlawful and dangerous as a three-legged dog in a fireworks factory.
“How could an adviser seeking to comply with this rule possibly invest client funds in crypto assets after reading this release?” Uyeda quipped at the time. He did, however, support the proposal despite disagreeing “with a number of provisions.” It’s like saying, “I love the cake, but I’m not a fan of the frosting.”
Peirce, the lone wolf among the five commissioners, voted against the rule, stating that it would expand the reach of custody requirements to crypto assets while likely shrinking the ranks of qualified crypto custodians. In simpler terms, it was like trying to fit a square peg in a round hole—messy and not particularly effective.
Uyeda’s latest remarks come just days after he mentioned on March 10 that he had asked SEC staff “for options on abandoning” part of a proposal that would require some crypto firms to register with the regulator as exchanges. Because who doesn’t love a good game of regulatory hopscotch?
Meanwhile, the Trump-era SEC has also decided to kill a rule that asked financial firms holding crypto to record them as liabilities on their balance sheets, known as SAB 121. It’s like saying, “If you can’t see it, it doesn’t exist!”
In a plot twist worthy of a soap opera, President Donald Trump has chosen former SEC Commissioner Paul Atkins to take over from Uyeda as chair of the agency. This is now a step closer, with a Senate hearing reportedly slated for March 27. Stay tuned, folks; the drama is just getting started!
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2025-03-18 04:42