The SEC, led by Acting Chair Mark Uyeda, is considering changes to the controversial crypto custody rule initially proposed by former Chair Gary Gensler, which aimed to impose stricter custody standards for investment advisers. Gensler's proposal would have required advisers to hold client assets, including cryptocurrencies, with qualified custodians such as banks. In a recent conference, Uyeda acknowledged significant concerns from the industry about the proposal's broad scope, suggesting there may be challenges in moving forward with it. He has directed SEC staff to collaborate with the agency’s crypto task force to explore alternative approaches, which could include dropping the rule entirely. Furthermore, under Uzeda's leadership, the SEC plans to reassess the expansion of the definition of 'exchange' to better account for crypto transactions, moving towards a more lenient regulatory approach compared to Gensler's era. This shift appears to align with the broader adjustments in crypto regulation under the current administration, moving away from a stringent enforcement model toward collaborative engagement with the crypto industry.

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