TLDR
- Acting SEC Chair Mark Uyeda signals possible revision or withdrawal of controversial crypto custody rule proposed by former Chair Gary Gensler
- Uyeda has directed SEC staff to work with the agency’s crypto task force to explore alternatives to the existing proposal
- The SEC under Trump’s administration has shifted to a more lenient approach toward crypto regulation compared to the previous administration
- The SEC has dropped enforcement actions against major crypto firms including Binance, Kraken, and Coinbase
- A dedicated crypto task force led by Commissioner Hester Peirce (“Crypto Mom”) has been formed to work closely with the industry
The Securities and Exchange Commission (SEC) is considering major changes to a controversial cryptocurrency custody rule. Acting SEC Chair Mark Uyeda has directed staff to reexamine the proposal that would tighten custody standards for investment advisers handling crypto assets.
The custody rule was first proposed in February 2023 under former Chair Gary Gensler. It would require registered investment advisers to keep cryptocurrency with qualified custodians. These custodians would need to follow strict requirements.
Uyeda addressed concerns about the rule at the Investment Company Institute’s 2025 conference in San Diego.
“Given such concern, there may be significant challenges to proceeding with the original proposal,” he said on Monday. He has asked SEC staff to work with the crypto task force to look at other options.
The original proposal would expand federal custody rules to include assets like cryptocurrency. Investment advisers would need to hold client assets with qualified custodians, such as federal or state-chartered banks.
Many in the industry pushed back against these requirements. A group of bank and financial industry associations, including the American Bankers Association, warned the proposal “could have a material impact on their business.”
This marks the second time this month that Uyeda has asked staff to reconsider rules. Last week, he directed a review of a proposed rule change that would expand the definition of an “exchange.” This change could affect decentralized crypto projects.
The SEC’s view on crypto has changed dramatically
The SEC’s stance on crypto has changed dramatically under President Donald Trump’s administration. The agency has moved from a tough regulatory approach to a more cooperative one.
Under Gensler’s leadership, the SEC took a hard line on crypto oversight. Gensler often stated that most cryptocurrencies besides bitcoin were securities. This position led to multiple enforcement actions against crypto companies.
The new direction became clear when the SEC dropped enforcement actions against major crypto firms. Companies like Binance, Kraken, and Coinbase no longer face these legal challenges. This has brought relief to an industry that dealt with years of uncertainty.
“Crypto Mom” leads the task force
Another big change was the formation of a dedicated crypto task force. Commissioner Hester Peirce, often called “Crypto Mom” for her pro-crypto stance, leads this group. The task force aims to work closely with the crypto industry to develop better regulations.
The task force will hold its first roundtable this Friday. The meeting, titled “How We Got Here and How We Get Out – Defining Security Status,” will address key issues in crypto regulation.
The SEC has revoked other Gensler policies
The SEC under Trump has also revoked other Gensler-era policies. They removed Staff Accounting Bulletin (SAB) 121, which required firms holding crypto assets to record them as liabilities on their balance sheets.
These changes reflect a broader shift in approach to crypto regulation. Before Trump took office, 18 states had filed a lawsuit against the SEC over its crypto regulations. The current administration seems intent on addressing these concerns.
Congressional Republicans had joined crypto firms and traditional finance companies in opposing Gensler’s proposed custody rule. Many worried it would limit the number of banks willing to work with the crypto sector.
Uyeda’s speech on Monday focused on the SEC’s overall rulemaking process. He discussed possibly withdrawing rules, re-proposing them, or delaying compliance dates to better serve the market.
The crypto task force represents a new chapter in the relationship between regulators and the crypto industry. After years of what Peirce called “regulation by enforcement,” the SEC appears ready for more open dialogue with crypto companies.
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