Commissioners of the US Securities and Exchange Commission (SEC) unite in a landmark push to overhaul America’s approach to cryptocurrency custody under the leadership of newly appointed Chairman Paul Atkins.
At the Crypto Task Force’s third roundtable in Washington D.C., prominent SEC figures also included Commissioners Mark Uyeda, Caroline Crenshaw, and Hester Peirce, who delivered a powerful message: the current regulatory framework for crypto custody is insufficient, outdated, and urgently needs reform.
Crypto Regulatory Revolution
Commissioner Uyeda cut straight to the heart of the matter, highlighting how regulatory uncertainty has forced investment advisers to “shoehorn” crypto assets into qualified custody arrangements that may be unnecessarily restrictive.
In a statement that signals a potential shift in SEC thinking, Uyeda aligned with Commissioner Peirce’s position that “a large number of crypto assets are not securities.” This distinction carries enormous implications for the industry, potentially freeing certain digital assets from burdensome regulatory requirements.
The conversation wasn’t just about relaxing standards, however. Commissioner Crenshaw provided a crucial counterbalance, comparing crypto custody to airline luggage handling—a vivid reminder of what’s at stake when protecting investors’ assets.
In addition, she raised essential questions about maintaining robust protections while acknowledging the unique nature of blockchain technology. Her concerns about smart contract vulnerabilities, hacking threats, and the challenges of establishing exclusive control over digital assets reflect the genuine security challenges facing the industry.
Commissioner Peirce, long known for her crypto-friendly stance, delivered perhaps the most forward-thinking perspective, advocating for a more nuanced approach that recognizes the heterogeneity of crypto assets.
“For some crypto assets, qualified custodians exist, but for others, self-custody might be the safer option,” she noted, challenging the one-size-fits-all regulatory mindset. Peirce colorfully described the current regulatory environment as a “floor is lava” scenario where participants must navigate unclear and risky gaps—an unsustainable situation that stifles innovation while failing to provide adequate investor protection.
The Atkins Era
Chairman Paul Atkins, making his debut speech after being sworn in, wasted no time establishing his administration’s priorities. With refreshing directness, he declared his eagerness to tackle “long festering issues” in digital asset regulation, signaling that the regulatory paralysis of recent years may finally be coming to an end.
Atkins’ vision extends beyond mere regulatory housekeeping. He projects “huge benefits from this market innovation for efficiency, cost reduction, transparency, and risk mitigation”—a notable departure from the skepticism that has characterized the SEC’s approach to cryptocurrency in recent years.
Perhaps most significantly, he acknowledged that “innovation has been stifled for the last several years due to market and regulatory uncertainty that unfortunately the SEC has fostered,” a remarkable admission of the agency’s role in hampering blockchain development.
The Chairman explicitly endorsed Commissioner Peirce’s leadership on digital asset policy, appointing her to lead the Crypto Task Force and develop a “rational regulatory framework for crypto asset markets.” This partnership between the Chairman and the SEC’s most prominent crypto advocate suggests a genuine commitment to meaningful reform rather than incremental adjustments.
The roundtable focused intensely on practical barriers facing SEC registrants attempting to custody digital assets under current regulations. Atkins questioned whether the existing “special purpose broker-dealer” structure remains viable or if an entirely new broker-dealer regime tailored to crypto assets is needed. Market signals, Atkins noted, clearly indicate that the “current framework badly needs attention.”
Looking forward, Atkins emphasized the importance of collaborative efforts across government, expressing his intention to work with both market participants and colleagues in US President Donald Trump’s administration to establish a regulatory framework that is both rational and fit-for-purpose for crypto assets. This whole-of-government approach recognizes that effective crypto regulation requires coordination beyond the SEC’s traditional boundaries.
