The U.S. Securities and Exchange Commission (SEC) is signaling a major shift in its approach to crypto regulation, potentially revising or even abandoning former chair Gary Gensler’s controversial proposal to tighten custody rules for digital assets.
Under Gensler’s leadership, the SEC had pushed for stricter oversight, requiring investment advisers to store client crypto holdings with federally approved custodians, such as banks or trust companies. However, Acting SEC Chair Mark Uyeda now suggests that this approach may be reconsidered due to concerns from industry stakeholders.
Speaking at an investment conference in San Diego, Uyeda highlighted the broad scope of the original proposal and acknowledged that implementing it as originally planned could present “significant challenges.” In response, he has directed SEC staff to collaborate with the agency’s crypto task force to explore alternatives, including potentially withdrawing the rule altogether.
🚨 🚨 BREAKING NEWS:
— Kenny Nguyen (@mrnguyen007) March 17, 2025
Acting SEC chair Uyeda directs staff to reexamine proposed crypto custody rule. 📃 🪙 🇺🇸 pic.twitter.com/dSsSZgTUsq
A Broader Re-Evaluation of Crypto Rules
This reconsideration is part of a larger shift in the SEC’s stance on crypto regulation since Donald Trump’s return to the presidency. Under the Biden administration, the SEC, led by Gensler, adopted a strict enforcement-driven approach, frequently cracking down on crypto firms and expanding regulatory definitions to bring more entities under SEC oversight.
However, under Trump’s leadership, Uyeda and his team are reassessing these measures. Among the key changes:
- Revisiting the Definition of "Exchanges": The SEC is reconsidering whether crypto-related entities that facilitate transactions should be classified as exchanges, potentially rolling back a proposal that would have subjected them to additional regulation.
- Halting Enforcement Actions: In a dramatic shift, the SEC has dropped legal battles against major crypto firms such as Binance, Kraken, and Coinbase, signaling a more cooperative regulatory stance.
- Revoking SAB 121: The SEC has rescinded the Staff Accounting Bulletin 121 (SAB 121), a rule requiring companies holding crypto assets to list them as liabilities on their balance sheets.
A major initiative under this new direction is the formation of a dedicated crypto task force, led by longtime industry advocate and SEC Commissioner Hester Peirce, often referred to as "Crypto Mom." This task force aims to foster dialogue with the crypto industry rather than regulate through enforcement.
Its first public event, a roundtable discussion titled “How We Got Here and How We Get Out – Defining Security Status,” is scheduled for Friday. The session is expected to address longstanding concerns about the SEC’s classification of crypto assets as securities and explore regulatory frameworks that better align with the industry’s needs.
What This Means for the Crypto Industry
For crypto businesses and investors, these developments suggest a more favorable regulatory climate in the coming years. Gensler’s aggressive stance created uncertainty, making it difficult for firms to navigate compliance requirements without facing legal scrutiny. Uyeda’s leadership, in contrast, appears to prioritize industry collaboration, reducing the regulatory risks that have plagued the sector.
While it remains to be seen whether the crypto custody rule will be entirely withdrawn or merely revised, the SEC’s latest moves indicate a significant pivot away from the harsh oversight of the previous administration. With lawsuits dropping, regulatory frameworks being reconsidered, and direct industry engagement on the rise, the crypto sector may finally see a more constructive regulatory environment.
HODL Team
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