Following the resignation of Commissioner Hester Peirce effective Oct. 2, the U.S. Securities and Exchange Commission (SEC) now operates with two sitting members: Chairman Paul Atkins and Commissioner Mark Uyeda. The roster reduction coincides with a procedural update that allows a single commissioner to act as an official quorum under specific recusal conditions.
Quorum Rule Modified Under 17 CFR 200.41
Dated Sept. 30 and effective Oct. 2, an administrative amendment to 17 CFR 200.41 alters how the agency establishes a quorum. While existing rules allowed the total number of sitting commissioners to constitute a quorum when vacancies dropped the roster below three, the amended provision extends disqualification rules.
Under the updated framework, if every other member in office is disqualified from a specific matter due to conflicts of interest under 17 CFR 200.60, the sole remaining eligible member can establish a Commission quorum. If Chairman Atkins is recused from a particular case, Commissioner Uyeda can form a quorum alone, and vice versa. The SEC explained that the amendment promotes "flexibility and finality" regarding internal organization. Disagreement with a regulatory proposal does not constitute legal disqualification.
This administrative shift occurs amid broader federal regulatory actions, such as when FinCEN withdrew its crypto mixing proposal and the CFTC proposed a federal framework for retail leveraged trading.
Status of Custody and Tokenized Stock Rules
Prior to her departure—detailed in a resignation letter dated Sept. 21—Peirce voted alongside Atkins and Uyeda on Oct. 1 to approve release IA-7023. The custody proposal addresses how registered investment companies and advisers manage crypto assets, with public comments open through Dec. 7.
The agency's active regulatory inventory also includes Regulation Crypto Assets, issued Aug. 18 and published Aug. 21, which proposes offering exemptions and conditional safe harbors for investment contracts. Separately, the SEC's Sept. 17 Innovation Exemption provides five-year conditional relief for specified tokenized National Market System (NMS) stock trading venues and liquidity providers.
Key Takeaways
- Roster Reduced: Hester Peirce concluded her tenure on Oct. 2, leaving Chairman Paul Atkins and Commissioner Mark Uyeda on the roster updated Oct. 3.
- Quorum Rule: An amendment to 17 CFR 200.41 enables a single eligible commissioner to form a quorum when all other sitting members are recused.
- Custody Proposal: Voting records show release IA-7023 was approved on Oct. 1 prior to Peirce's departure, with public comments due Dec. 7.
- Tokenized Relief: The Sept. 17 Innovation Exemption maintains a five-year conditional relief order for qualifying NMS stock venues.
Why It Matters
Operating with only two commissioners concentrates regulatory authority and creates a unique administrative dynamic for pending crypto policy. Under the new disqualification rule, a recusal by either Atkins or Uyeda allows the remaining member to unilaterally decide specific Commission matters. Market participants will need to watch how this streamlined bench navigates controversial initiatives, including crypto custody standards and safe harbor proposals, without a full five-member panel.
