The United States Securities and Exchange Commission (SEC) is considering reversing a proposed rule that would impose stricter custody requirements on investment advisers handling cryptocurrencies.

Acting SEC Chair Mark Uyeda announced the potential change during a conference in San Diego, highlighting concerns over the broad scope of the crypto custody rule and compliance challenges.

Proposed in February 2023, the custody rule would require registered investment advisers to store crypto assets with qualified custodians while implementing additional safeguards. Significant objections from industry participants have led the SEC to reassess its approach.

Uyeda also revealed that the agency is reviewing a separate regulation mandating monthly portfolio holdings reports for unit trusts and exchange-traded funds, a policy that has raised concerns about its impact on AI-driven trading strategies.

These regulatory reviews mark a shift in SEC policy under the Trump administration, which has already rolled back several cryptocurrency-related initiatives introduced under former Chair Gary Gensler.

Recent changes include rescinding accounting guidance for cryptocurrency firms, dropping enforcement actions, and forming a cryptocurrency task force to reassess priorities.

With former SEC Commissioner Paul Atkins set to take over as chair, Uyeda's push for regulatory revisions signals a more industry-friendly approach, particularly towards digital assets and financial institutions navigating changing compliance requirements.

For more information on these topics, visit diplomacy.edu.