The U.S. Securities and Exchange Commission is considering walking back a proposal to tighten cryptocurrency custody requirements, marking the acting chair's latest move under the Trump administration.
SEC Acting Chair Mark Uyeda said commenters had significant concerns over a rule proposed in February 2023 that would require registered investment advisers to keep crypto with a qualified custodian and require those custodians to abide by certain requirements.
"Given such concern, there may be significant challenges to proceeding with the original proposal," Uyeda said on Monday at the Investment Company Institute's 2025 Investment Management Conference in San Diego. "As such, I have asked the SEC staff to work closely with the crypto task force to consider appropriate alternatives."
Uyeda's speech on Monday primarily focused on the SEC's rulemaking process, including potentially withdrawing or re-proposing rules or delaying compliance dates.
The custody rule, proposed under the former Biden administration when Gary Gensler led the agency, would expand the current custody rule to include any client assets that an adviser has custody over and would also add more protections to those assets.
Registered investment advisers are subject to a custody rule, which requires them to maintain those assets with a qualified custodian, such as a bank or broker-dealer. The rule would extend those standards to the crypto industry, raising concerns about whether that would further limit the number of banks willing to do business with the sector.
Congressional Republicans, crypto firms and traditional finance companies pushed back against the rule when it was proposed. A coalition of bank and financial industry associations, including the American Bankers Association, said at the time that the proposal "could have a material impact on their business."
Uyeda's move to revisit the rule marks the second time this month that the acting chair has asked the SEC staff to reconsider its rules. Last week, Uyeda said he directed the agency's staff to review a proposed rule change that would expand the definition of an "exchange" in a way that could potentially loop in decentralized crypto projects.
Both actions signal a change in course for the SEC under the new Trump administration. During the previous Biden administration, former Chair Gensler said most cryptocurrencies besides bitcoin were securities.
Since the Trump administration's arrival, the SEC has rapidly changed direction on several key crypto policies. In a matter of just a few weeks, it has rescinded controversial crypto accounting guidance, dropped enforcement actions against major crypto industry players, created a crypto task force and issued a statement on memecoins. The crypto task force's first roundtable to discuss "defining security status" is on Friday.
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