SEC Commissioner Hester Peirce likened the current U.S. regulatory environment for cryptocurrency to a game of 'the floor is lava' played in the dark. During the SEC’s 'Know Your Custodian' roundtable on April 25, Peirce explained that financial firms engaging with crypto have to navigate unclear regulations by avoiding direct contact with crypto assets, which she referred to as the 'lava.' She emphasized the need for clearer rules to facilitate crypto custody, arguing that without direct custodial options, trading in crypto assets will remain challenging. Peirce stated that investment advisers are uncertain about which crypto assets are considered securities and which entities qualify as custodians. She also noted that without a robust custodial framework, a vibrant crypto market cannot be established. SEC Commissioner Mark Uyada echoed her sentiments, highlighting the importance of regulatory access to custodial solutions for those working with digital assets. The new SEC chair, Paul Atkins, expressed a commitment to creating clear regulatory guidelines to enhance the crypto landscape, moving away from the confusion generated under previous leadership.

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