The U.S. Securities and Exchange Commission's roster has contracted to two members following Commissioner Hester Peirce's October 2 resignation. Chairman Paul Atkins and Commissioner Mark Uyeda now comprise the Commission's full membership, a reduction that coincides with a significant procedural shift in how the agency conducts business.
On September 30, the SEC amended its quorum rules, effective October 2. The change modified 17 CFR 200.41 to permit a single eligible commissioner to constitute a quorum when all other sitting members are disqualified from a particular matter. Previously, the disqualification exception accommodated only two eligible commissioners under such circumstances.
Under the revised rule, if Atkins is disqualified from a specific matter, Uyeda could act as the Commission's quorum, and vice versa. The amendment distinguishes disqualifications from vacancies and absences, preserving different operational pathways. A commissioner's disagreement with a proposal does not qualify as a disqualification.
The SEC characterized the amendment as promoting flexibility and finality while describing it as internal management rather than substantive regulation. The change occurred before Peirce's departure took effect, with the three commissioners voting to propose custody rules on October 1.
Pending Crypto Measures and Their Status
Several crypto-related regulatory actions remain at various stages. The SEC proposed custody rules on October 1, addressing how regulated investment companies and registered advisers may handle crypto securities and client funds. Public comment on the proposal closes December 7.
A second pending measure is Regulation Crypto Assets, issued August 18 and published August 21, which would create offering exemptions for certain investment contracts involving crypto assets while maintaining disclosure and antifraud requirements.
Tokenized-stock trading relief exists at a different stage. The September 17 Innovation Exemption is a temporary conditional order covering specified tokenized National Market System stock trading venues. The exemption includes five-year conditional relief with limits on stock symbols and trading volume, requirements for equivalent shareholder rights, public auditable smart contracts, and operating disclosures.
Legal Constraints Remain in Place
The smaller Commission remains subject to existing legal frameworks. The Administrative Procedure Act's notice-and-comment requirements apply to covered rulemaking. Any commissioner can request that a circulated matter be withdrawn for joint deliberation, and votes must be reported to the secretary before matters become final.
Under 17 CFR 200.60, commissioners must carefully weigh their qualifications in matters involving interests and relationships. Reducing the Commission's size does not supply additional substantive authority, and reviewing courts retain authority to set aside agency action found unlawful or taken without required procedure.
Key regulatory deadlines include October 20 for public comment on the offering proposal and December 7 for the custody proposal. Subsequent Commission decisions on these matters and conditional trading relief will demonstrate how the restructured agency operates under the new quorum rules.
