SEC Eyes Crypto Custody Rule Overhaul Under Trump-Era Initiative

The U.S. Securities and Exchange Commission (SEC) is actively exploring updates to its custody rules concerning digital assets. This includes examining how broker-dealers, asset managers, and investment advisors handle cryptocurrency transactions. Paul Atkins, former SEC Chair under President Trump, recently discussed the agency's "Project Crypto" initiative.

Atkins stated the SEC is "mobilizing all our different divisions and offices" to implement recommendations from President Trump's crypto working group. The goal is to make the U.S. a more crypto-friendly nation by adjusting regulations, some of which are nearly a century old.

Secure Custody Concerns

A central concern is the secure custody of digital assets. "We don't want the crypto assets to be on some flash drive in somebody's drawer," Atkins emphasized, highlighting the need for secure storage solutions.

Certainty Through Regulation

The overarching aim is to provide certainty for market participants. The SEC's work will be grounded in existing legislation and any future laws passed by Congress. The GENIUS Act was specifically mentioned.

Instant Payments and Blockchain

Atkins also commented on a district court ruling on debit card interchange fees, suggesting it could support real-time or instant payment networks. He proposed that blockchain technology could bolster such systems. However, he acknowledged the need for built-in delays to address potential errors.

He noted that long clearance times increase system risk, potentially leading to unforeseen issues.

Key Takeaways

• SEC Review: The SEC is actively reviewing and updating crypto custody rules.
• Focus on Clarity: The goal is to provide clarity and certainty to the crypto market.
• Secure Custody: Ensuring the secure storage of digital assets is a priority.
• Instant Payments: Blockchain could be used to improve payment processing, but risk mitigation is necessary.