Since Atkins’ Arrival, SEC is Covertly Preparing its Largest Crypto Reform

The SEC has just sent to the White House a reform project of the crypto custody rules. It is about determining how financial actors can legally hold cryptocurrencies on behalf of their clients without getting overwhelmed by regulations.

SEC Seeks to Update Crypto Custody

Led by Paul Atkins, the SEC’s reform project titled Amendments to the Custody Rules aims to update the rules of the Investment Advisers Act and the Investment Company Act of 1940. The document filed with the OIRA at the White House, specifies that the Commission intends to:

modernize the rules governing the custody of clients’ and funds’ assets, including crypto assets in each case.

Investment advisers and management companies have until now faced traditional custody rules designed for traditional financial securities, which were poorly suited to digital assets. As a result, many institutional actors preferred to stay on the sidelines rather than expose themselves to compliance risk. The SEC aims precisely to remove this ambiguity and eliminate certain outdated provisions. All this without sacrificing the protection of crypto investors.

Hyperliquid Opposes the Regulator

While the SEC is working on crypto asset custody, another regulatory issue is shaking the industry: that of perpetual contracts. And it is the Hyperliquid Policy Center (HPC) that has decided to put its foot down. In a letter jointly addressed to the SEC and the CFTC, HPC asks the two regulators to adopt a harmonized framework for these derivative products without an expiration date. The central argument is that a perpetual contract should be classified according to its economic structure… and not according to the underlying asset it tracks.

The topic is far from theoretical because Hyperliquid’s HIP-3 markets have generated over 480 billion dollars in volume in ten months of existence, with about 4 billion dollars in open interest. Without clear taxonomy, disagreements on the jurisdiction of each regulator inevitably end up in court. A harmonized framework would therefore allow platforms to compete on execution quality and liquidity. The timing is no coincidence as Donald Trump recently mentioned the CFTC’s work to allow Hyperliquid to operate in the United States fully compliant and legal.

Two files and one obsession… Ending the uncertainty that slows crypto adoption in the United States. The custody reform sent by the SEC to the White House is the most tangible proof. The regulator no longer just punishes; it is finally building a framework. It remains to be seen if the text will survive its passage through the OIRA without too many changes.

Eddy S.

The world is evolving and adaptation is the best weapon to survive in this undulating universe. Originally a crypto community manager, I am interested in anything that is directly or indirectly related to blockchain and its derivatives. To share my experience and promote a field that I am passionate about, nothing is better than writing informative and relaxed articles.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.