Crypto regulation is poised for a breakthrough as a top SEC official champions streamlined oversight, expanded custody options, and investor-friendly policies empowering digital asset adoption.
SEC Commissioner Aims to Cut Regulatory Red Tape in Crypto Oversight
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce advocated for a more accommodating regulatory approach to digital assets on June 5 at the Third Annual Conference on Emerging Trends in Asset Management in Washington, D.C.
Highlighting inefficiencies in the Commission’s handling of crypto products, Peirce pointed to the SEC’s delayed approval of spot bitcoin and ether exchange-traded products (ETPs), which only occurred after judicial intervention. Emphasizing that as asset managers pursue innovation, the SEC must act as a constructive enabler rather than a gatekeeper, she stressed the benefits of procedural consistency:
A standardized approach for such ETPs could ease the burden for the industry and the SEC staff.
Peirce called for enhanced clarity in regulatory guidance to facilitate investor access to crypto assets. She remarked: “Additional guidance could open the door to enhanced investor choice and increased portfolio diversification for investors. The Commission is working, for example, on providing clarity for investment advisers and investment companies.” She singled out custody as a key unresolved issue—particularly the uncertain status of state-chartered limited purpose trusts as custodians under the Investment Company Act and Investment Advisers Act. These ambiguities have left funds and advisers without a clear path for compliance.
The SEC Commissioner expressed cautious optimism about recent developments that could help resolve these barriers: “More options for crypto asset custody may be coming following the rescission of Staff Accounting Bulletin No. 121 and clarifying statements made by federal banking regulators, including the OCC.” She noted:
I hope that the staff of the Division of Investment Management can clarify how funds and advisers can treat a state trust as a bank with respect to the custody of crypto assets.
Peirce argued that expanding the available custody options and improving regulatory transparency would not only support innovation but also protect investors. She encouraged a broader conversation around whether custody requirements should continue to revolve around “qualified custodians” or shift toward principles that better address the specific risks of digital assets. The Commissioner urged her colleagues to confront these structural issues head-on, stating that more permanent clarity is essential for bridging traditional finance and emerging blockchain-based products. While acknowledging the complexities, Peirce advocated for the Commission to adopt a forward-thinking regulatory posture that encourages innovation and investor empowerment.
