Potential SEC Custody Rule Rollback May Impact Crypto Market and Institutional Investments

SEC’s acting Chair, Mark Uyeda, has indicated a potential shift in the regulatory approach for digital asset custody, reconsidering a stringent rule proposed under the Biden administration. This rule, initially created to address failures in the crypto industry like FTX, required firms to use qualified custodians, potentially disqualifying many exchanges and wallets. Uyeda’s recent remarks suggest significant stakeholder concerns about the rule’s broad scope, leading to discussions about alternatives or possible withdrawal. Manthan Dave, co-founder of Palisade, argues that a more structured guideline approach could enhance secure asset management without blanket requirements, potentially boosting institutional investments as traditional finance aggressively enters the space. The ongoing discourse points towards a strategic alignment with Trump’s previous pro-crypto stance, possibly affecting market regulations and easing operations for industry players.