- The SEC is addressing crypto custody, with Chairman Paul Atkins highlighting the need for updated rules to fit blockchain technology.
- Atkins criticized outdated frameworks, questioning their compatibility with crypto and calling for a new broker-dealer regime.
- Regulatory uncertainty, he argued, is stifling U.S. crypto innovation, urging collaboration to modernize financial markets and foster clarity.
The SEC is finally tackling one of the biggest unanswered questions in crypto—how digital assets should be custodied. With firms struggling to fit into existing financial rules, regulators are hearing firsthand why the current system doesn’t quite work for crypto.
Newly appointed Chairman Paul Atkins wasted no time addressing the regulatory uncertainty surrounding crypto custody, making it clear that existing laws don’t fully account for blockchain technology.
“Market participants engaging with this technology deserve clear regulatory rules of the road,” he said, calling out the previous SEC administration’s role in fostering uncertainty.
A major focus of his speech was whether existing custody rules under the Exchange Act, the Advisers Act, and the Investment Company Act need revisions to properly accommodate crypto assets. Current frameworks force firms to operate within a system designed for traditional finance, which may not be compatible with the industry’s unique structure.
Atkins questioned the special-purpose broker-dealer framework, asking outright: “Is the so-called regime workable for market participants, or is a new crypto asset broker-dealer framework needed?” He pointed to market dissatisfaction as a sign that current rules badly need attention.
Beyond just rule changes, Atkins made it clear that regulatory uncertainty is stifling innovation in the U.S. crypto sector. He described blockchain technology as an opportunity to modernize financial markets, improve efficiency, cost reduction, transparency, and risk mitigation, and argued that firms can’t realize these benefits if regulations remain unclear.
He urged roundtable panelists to help guide the SEC, hinting at a willingness to collaborate with Congress in shaping a framework that works for crypto. His message was simple—without regulatory reform, the industry remains stuck in limbo.
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