The U.S. Securities and Exchange Commission is contemplating reversing a proposed regulation that would enforce stricter custody standards for investment advisors managing cryptocurrencies.
Acting SEC Chair Mark Uyeda made this potential change known during an industry conference in San Diego on Monday, expressing concerns about the rule’s wide-ranging implications and compliance hurdles, as reported by Reuters.
The custody regulation, put forward in February 2023 under the Biden administration, would mandate that registered investment advisors keep crypto assets with a qualified custodian while fulfilling additional security measures.
Uyeda noted that significant objections from the public have prompted the agency to consider alternative strategies.
ETF to disclose monthly portfolio holdings
Uyeda also shared that the SEC is evaluating a different rule that would require mutual funds and exchange-traded funds to disclose their portfolio holdings on a monthly basis rather than the current quarterly schedule.
This regulation, enacted in August 2023, was intended to boost transparency; however, industry feedback has expressed worries, particularly surrounding the influence of artificial intelligence (AI) in trading strategies.
These developments indicate a broader shift in SEC policy under the Trump administration, which has already overturned various crypto-related initiatives that were established under former Chair Gary Gensler. Recently, the SEC revoked accounting guidance for crypto firms, halted enforcement actions against industry participants, and formed a crypto task force to evaluate regulatory priorities.
With former SEC Commissioner Paul Atkins slated to assume the chair position, Uyeda’s push for regulatory changes reflects a more industry-friendly approach, especially towards digital assets and financial institutions concerned about rigorous compliance requirements.