SEC’s Shift Under Mark Uyeda: Exploring New Directions for Crypto Regulations and Custody Rules

• From harsh crackdowns to reconsideration—what’s really driving the SEC’s sudden shift on crypto?

• SEC may revise or scrap strict crypto custody rules under Acting Chair Mark Uyeda.

• Uyeda signals a shift toward balanced crypto regulations, reconsidering restrictive past policies.

The SEC’s evolving stance on cryptocurrency regulation under Mark Uyeda could reshape the landscape for digital assets, signaling hope for the industry.

Mark Uyeda’s bold stance on crypto regulations

Now, under acting chair Mark Uyeda, the SEC may revise or even scrap a controversial rule introduced under the Biden administration, which sought to impose stricter crypto custody standards for investment advisers.

Speaking at an investment industry conference in San Diego on the 17th of March, Uyeda acknowledged the widespread criticism of the proposal, noting that commenters had expressed “significant concern” over its “broad scope.”

Uyeda said,

“Given such concern, there may be significant challenges to proceeding with the original proposal. As such, I have asked the SEC staff to work closely with the crypto task force to consider appropriate alternatives, including its withdrawal.”

He further added,

“Turning to future rulemaking, the Commission should act like a super-sized freighter, not a speedboat – and that means returning to a smoother regulatory course than the rapid changes that have been promulgated over the last four years.”

What happened during Gensler’s tenure?

For those unaware, during Gary Gensler’s tenure, the Biden administration introduced a proposal to tighten custody rules for investment advisers, extending them to cover all client-held assets, including crypto.

The rule required advisers to use a qualified custodian for digital assets, a move Gensler defended by stating that advisers “cannot rely on” crypto platforms due to their operational risks.

However, the proposal faced strong opposition from within the SEC itself.

Commissioner Hester Peirce and acting chair Mark Uyeda, alongside industry advocacy groups, pushed back, arguing that the rule was both unlawful and dangerous for the evolving crypto landscape.

Peirce, the only commissioner to oppose the initial custody rule, had warned that it would “expand the reach of the custody requirements to crypto assets while likely shrinking the ranks of qualified crypto custodians.”

Now, with Uyeda at the helm, the agency appears to be reassessing its restrictive policies.

In fact, Uyeda recently instructed staff to explore “options on abandoning” parts of the controversial proposal that sought to classify certain cryptocurrency protocols as Alternative Trading Systems (ATS).

Therefore, the SEC’s reconsideration of past policies signals a willingness to adapt to the rapidly evolving digital asset landscape. 

Implications for the future of cryptocurrency regulation

The reversal of strict regulations could pave the way for a more innovative and adaptive regulatory framework.

By recognizing the unique characteristics of cryptocurrencies and the rapid evolution of the market, the SEC under Uyeda could foster an environment that encourages growth and investment in the digital asset space. This change may not only influence regulatory practices in the United States but also set a precedent for international regulatory bodies.

Conclusion

In summary, the SEC’s potential shift under Mark Uyeda marks a significant turning point for cryptocurrency regulation, moving from a restrictive approach to one that could embrace innovation. As the agency reflects on past policies and adapts to the burgeoning crypto environment, stakeholders can look forward to more balanced regulations that may promote industry growth and market stability.