The Gensler-led SEC wants to “extend the scope” of the 2009 Custody Regulations.
A five-member SEC panel voted 4-1 to approve a proposal that may make it harder for bitcoin firms to act as digital asset custodians.
According to SEC Chairman Gary Gensler, the plan would apply to custodians of “any assets,” including cryptocurrency.
Gensler warned that some crypto trading platforms offering custody are not “qualified custodians.”
The SEC defines a qualified custodian as a federal or state-chartered bank, savings organization, trust company, broker-dealer, futures commission merchant, or foreign financial institution.
U.S. and offshore organizations must separate all custodied assets, including cryptocurrency, and undergo annual public accountant audits to become “qualified custodians” under the new laws.
Gensler stated these modifications will “extend the scope” to all asset classes, but explicitly targeted the crypto industry:
“The 2009 regulation covers a lot of digital assets. […] Several crypto trading and lending platforms claim to custody investors’ crypto, yet they’re not qualified custodians. Some platforms have mixed investors’ crypto with their own or other investors’.
“When these platforms go bankrupt—something we’ve seen time and again recently—investors’ assets often have become property of the failed company, leaving investors in line at the bankruptcy court,” the SEC chairman said.
Gensler also noted that few crypto businesses would be trustworthy custodians:
Investment advisers cannot use crypto platforms as custodians due to how they operate.
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