SEC Chairman Paul Atkins: A complete reform of the rules for encryption brokers may be on the way.

[SEC Chair Paul Atkins: Possible Overhaul of Rules for Crypto Brokers] Paul Atkins, the Chair of the U.S. Securities and Exchange Commission (SEC), stated on Monday local time that the current framework allowing brokers to act as custodians of digital assets may need to be abolished and replaced. He revealed that he is considering granting hedge funds the authority to self-custody crypto assets. Currently, only two institutions nationwide have obtained the “special purpose broker-dealer” license. Atkins pointed out at a digital asset roundtable that this lackluster response stems from the “significant restrictions” set by the previous administration. He emphasized, “Broker-dealers have never been prohibited from custodying non-securities crypto assets or crypto securities.” However, he also noted that the SEC may need to clarify how customer protection and capital requirements apply to such institutions. Atkins has asked SEC staff to explore new pathways for cryptocurrency regulation, including examining whether to revise custody rules to allow hedge funds, trading firms, and investment advisors to self-custody digital assets.