The Securities and Exchange Commission (SEC) may be poised to reverse course on one of its most contentious proposals from last year. Acting SEC Chair Mark Uyeda announced on Monday that he has instructed agency staff to reexamine the agency’s February 2023 proposal aimed at tightening cryptocurrency custody rules, following significant pushback from industry stakeholders.
Speaking at the Investment Company Institute’s 2025 Investment Management Conference in San Diego, Uyeda acknowledged the broad concerns voiced by commenters regarding the proposal’s scope and practicality. Specifically, the original rule sought to require registered investment advisers to safeguard digital assets exclusively through qualified custodians, while imposing a set of heightened compliance requirements on those custodians.
Uyeda highlighted that many financial firms and crypto participants viewed the framework as overly rigid, potentially hindering innovation without delivering clear guidance on how custodians should manage digital assets.
“With respect to the safeguarding proposal, commenters expressed significant concern with the broad scope of the proposed safeguarding rule for investment advisers, which would extend the custodial requirements to virtually any asset, including crypto,” Uyeda remarked during his speech.
“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.”
The acting chair also pointed to broader flexibility within the SEC’s rulemaking process, suggesting that the agency could opt to withdraw, revise, or delay elements of the proposal based on ongoing discussions and feedback.
Industry Reaction and Calls for Regulatory Clarity
The crypto industry has long voiced frustration over the SEC’s cautious and sometimes ambiguous stance on custody solutions. Firms offering crypto custodial services have struggled to navigate regulatory uncertainties, particularly around the definition of a qualified custodian and the operational standards required to comply with federal guidelines.
Several prominent industry bodies, including the Blockchain Association and Coinbase, previously submitted public comments urging the SEC to reconsider aspects of the custody rule that could hinder the growth of institutional crypto services. They argued that without a clear framework tailored to the digital asset ecosystem, the rule could inadvertently limit investor access to safe custody options.
Uyeda’s call to revisit the proposal has been welcomed by many in the industry as a sign that regulators may finally be open to engaging more constructively with crypto stakeholders to devise practical compliance pathways.
Changing Atmosphere Under the Trump Administration
Uyeda’s decision to revisit the crypto custody rule is not an isolated event—it marks the second major regulatory reassessment initiated by the acting chair this month. Just last week, Uyeda directed SEC staff to reexamine another high-profile proposal aimed at expanding the definition of an “exchange,” a change that could have potentially drawn decentralized crypto projects and protocols under the SEC’s jurisdiction.
These actions highlight a notable change in regulatory tone since the Trump administration took office. Under the prior Biden-led SEC, former Chair Gary Gensler was known for his aggressive stance on crypto, famously asserting that the vast majority of cryptocurrencies, aside from Bitcoin, qualified as securities. This approach resulted in a string of enforcement actions and stringent proposals targeting key areas like custody, exchanges, and accounting practices.
However, the early months of the Trump administration have seen the SEC swiftly pivot away from that hardline posture. In rapid succession, the commission has:
- Revoked controversial crypto accounting guidance
- Dropped ongoing enforcement cases against major crypto firms
- Established a dedicated crypto task force
- Issued public statements acknowledging emerging sectors like memecoins
Furthermore, the newly-formed crypto task force is set to host its first roundtable this week, focusing on the crucial issue of defining the security status of various digital assets.
Collectively, these moves signal a more open and dialogue-driven approach, one aimed at fostering clarity and encouraging innovation rather than relying solely on enforcement. The reassessment of the custody rule, alongside other policy rollbacks, is being closely watched by institutional players and crypto firms alike as a potential catalyst for increased participation and investment in the U.S. digital asset market.
Quick Facts:
- Acting SEC Chair Mark Uyeda has directed staff to reassess the agency’s proposed crypto custody rule.
- The original rule aimed to impose stricter regulations on how investment advisers handle crypto assets.
- Uyeda’s decision reflects industry concerns over regulatory clarity and balancing innovation with investor protection.
- Globally, regulators are increasingly focused on establishing clear crypto custody frameworks to support institutional adoption.
