SEC Drops to Two Commissioners as New Rule Affects Crypto Votes

The Securities and Exchange Commission now lists Chairman Paul Atkins and Commissioner Mark Uyeda as its only commissioners. Hester Peirce’s resignation took effect Oct. 2, according to her resignation letter and the SEC’s historical records.

The SEC’s roster, updated Oct. 3, shows Atkins and Uyeda as the agency’s remaining members. A quorum rule dated Sept. 30 also took effect Oct. 2.

The amendment to 17 CFR 200.41 allows one eligible commissioner to form a quorum when every other sitting commissioner is disqualified from a specific matter. Previously, the disqualification provision covered matters with two eligible commissioners. A separate vacancy provision already allowed the number of commissioners in office to form a quorum when fewer than three members were serving.

Under the amended rule, Uyeda could form a quorum if Atkins were disqualified from a matter. The same would apply to Atkins if Uyeda were disqualified. Disagreement with a proposal does not qualify as disqualification. Vacancies, nonattendance and recusal remain separate legal circumstances.

The SEC’s published rule describes the amendment as an internal management and organizational change intended to help the agency continue its work when commissioners are disqualified. The agency determined that the amendment did not require notice and comment.

Several crypto-related matters remain at different stages of the SEC process. The agency’s Oct. 1 custody proposal covers how regulated investment companies may hold crypto securities and similar assets. It also addresses how registered investment advisers safeguard client crypto funds and securities, along with related reporting requirements.

Atkins, Peirce and Uyeda voted Oct. 1 to release the custody proposal for public comment. The vote took place before Peirce’s resignation and the quorum amendment took effect. The SEC’s website lists the measure as a proposal and gives Dec. 7 as the comment deadline.

Another proposal, Regulation Crypto Assets, was issued Aug. 18 and published Aug. 21. It would create offering exemptions for certain investment contracts involving crypto assets, set disclosure requirements and retain antifraud and antimanipulation obligations. It also includes a conditional safe harbor concerning whether an arrangement qualifies as an investment contract. Comments are due Oct. 20.

The SEC has already issued conditional relief for certain tokenized National Market System stock trading venues and liquidity providers. The Sept. 17 Innovation Exemption provides five years of relief, subject to limits on stock symbols and trading volume, equivalent shareholder rights, public smart-contract records and operating disclosures.

For stock tokenized by an unaffiliated third party, the order requires notice to the issuer and an opportunity to object. The quorum amendment does not expand that relief or remove its conditions.

The SEC’s seriatim procedure requires each commissioner to report a vote or intended nonparticipation to the secretary before a circulated matter becomes final. A commissioner may request that a matter be withdrawn from circulation and scheduled for joint discussion.

The smaller Commission remains subject to the Administrative Procedure Act, statutory limits and judicial review. The quorum amendment does not give the SEC additional substantive authority or exempt future crypto rulemakings from notice-and-comment requirements. The SEC’s October voting records list the three-member custody vote and no later one-member crypto decision.