Yigit Taha OZTURK 
SEC Commissioner and head of the crypto task force Hester Peirce says that U.S. financial institutions are forced to navigate the crypto space like playing “the floor is lava”—but with the lights off.
Speaking at the SEC “Know Your Custodian” roundtable event on April 25, Peirce said, “It’s time to end this game. We need to turn on the lights and build walkways over the lava pit.”
Peirce explained that due to regulatory uncertainty, SEC-registered firms are forced to avoid direct engagement with crypto-related activities.
Investment Advisers Move Through Uncertainty
Peirce noted that investment advisers often do not know which crypto assets qualify as securities, which entities are considered qualified custodians, and whether “staking or exercising voting rights” would trigger custody violations.
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“In this regulatory game, if they misstep, they fall into burning legal lava—with no lamp to light the way,” she said.
Peirce also emphasized that brokers or alternative trading systems (ATS) that cannot custody or manage crypto assets will find it nearly impossible to facilitate trading, hindering the development of a strong market.
Signs of Change Within the SEC
SEC Commissioner Mark Uyeda echoed similar concerns, stressing the need for SEC registrants to access custodial solutions that meet legal requirements. Uyeda suggested allowing advisers to use state-chartered limited-purpose trust companies as qualified custodians.
Newly appointed SEC Chair Paul Atkins added that blockchain technology could bring “huge benefits” in efficiency, risk mitigation, transparency, and cost reduction. He stated that one of his main goals is to create “clear, fit-for-purpose regulatory rules” for digital assets, addressing the uncertainty left from former chair Gary Gensler’s tenure.
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