The United States Securities and Exchange Commission (SEC) has submitted a proposal for new rules to modernize crypto custody regulations. While a vote on the Crypto Clarity Act has stalled, the SEC regulators are pushing ahead with policy and updates to existing regulations.
In a rule change sent Tuesday, the regulator said it wanted to “improve and modernize the regulations” surrounding custody for the crypto space, and the new proposal aims to “clarify the framework for the custody of crypto assets” for investment advisers and companies. “This rulemaking would clarify the framework for the custody of crypto assets for investment advisers and investment companies, as well as make other modernizations needed to remove burdens from certain outdated provisions that are no longer needed to provide investor protection given the evolution in the markets and security trading and holding practices,” the proposal read.
The SEC has been active in several pro-crypto moves in recent months despite the Clarity Act remaining in limbo. Earlier this month, the SEC began preparing an “innovation exemption” to allow 24/7 trading of tokenized stocks on the blockchain.
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The president last week urged lawmakers to get the Clarity Act over the line. SEC Chair Paul Atkins has said he is “committed to supporting Congress in advancing” the bill. The latest proposal does fulfill the SEC’s recent promise to push through new crypto legislation regardless of whether the Crypto Clarity Act is passed. The SEC’s proposed framework is narrower than the larger CLARITY Act. The CLARITY Act aims to bring more regulatory clarity and investor protection for the cryptocurrency sector. Either way, both developments are welcome.