The US Securities and Exchange Commission (SEC) is reviewing its proposed custody rule, which could impose stricter requirements on investment advisers managing crypto and other assets.
Speaking at the “Investment Management Conference” in San Diego, Acting SEC Chair Mark Uyeda revealed that the agency is considering modifications or even rescinding the rule, initially introduced under former SEC Chair Gary Gensler.
The rule aimed to enhance investor protection by restricting custody services to federally chartered entities, a move Gensler justified as a safeguard against asset mismanagement. However, public comments have raised concerns about its broad scope, prompting the SEC to reconsider. Patrick McHenry, former Chair of the House Financial Services Committee, criticized the rule in a May 2023 letter, warning that it could leave crypto firms without viable custody options. He pointed out that regulators have discouraged federally chartered banks from serving crypto-related businesses, exacerbating the issue.
Uyeda also addressed shifting SEC priorities, including potential adjustments to a recently implemented rule requiring mutual and exchange-traded funds (ETFs) to disclose holdings monthly instead of quarterly. While designed to improve market transparency, this rule has sparked concerns over compliance costs and risks associated with artificial intelligence-driven data analysis. The SEC is now assessing whether to modify compliance deadlines and reporting obligations.
Additionally, Uyeda highlighted the agency’s broader regulatory refinements, including reassessing the classification of small entities to ensure proportional compliance burdens. Safeguarding client assets, refining fund disclosures, and addressing the role of predictive data analytics in financial markets remain central to the SEC’s regulatory agenda.
0 Comments