The Securities and Exchange Commission (SEC) has dramatically changed its position regarding digital assets following the change in administration with President Donald Trump’s election. The Commission is now controlled by Republicans, who typically are more supportive of innovation and entrepreneurship. This includes financial services.
Previously, during the Biden Administration, the SEC’s policy was regulation by enforcement and punitive rule application, undermining the sector’s development and growth. This obtuse approach failed to recognize the inevitability of digital assets, including digital securities.
Zodia Custody, a firm that enables institutional participation in crypto markets, works with major financial firms like Standard Chartered, Northern Trust, National Bank of Australia, and others. Zodia aims to support the merging of traditional financial services with the digital asset future. James Harris, Chief Commercial Officer at Zodia Custody, notes that the SEC is considering reversing a proposed rule that would have imposed burdensome custody requirements on institutions offering digital assets.
Harris states:
“The potential withdrawal of this proposed rule is another encouraging step in the more pragmatic and supportive regulatory approach emerging in the U.S. After a period of aggressive oversight, the SEC is now signalling greater flexibility. Alongside the repeal of SAB 121, this shift marks an exciting moment for the development of regulated digital asset custody services, creating a more constructive environment for institutional adoption.”
SAB 121 was a policy issued by the SEC that undermined crypto markets. It was one of the first things the new Commission reversed when the Republicans took over.
Harris notes that the SEC’s decisions to withdraw lawsuits targeting crypto firms, both centralized and decentralized, is promising for the entire digital asset industry.
“A more balanced regulatory stance enables DeFi to grow within a clearer and more cooperative framework, rather than pushing activity into opaque or unregulated services. It also suggests that decentralised models won’t be unfairly forced into outdated regulatory structures, helping to foster a safer and more sustainable digital asset ecosystem.”