A five-member panel of the US SEC voted 4-1 in support of a proposal that would impose more stringent restrictions on crypto custody.
The proposal, which has not been officially adopted by the SEC, suggests that revisions to the “2009 Custody Rule” will apply to custodians of “all assets,” including cryptocurrencies, according to a statement by SEC Chairman Gary Gensler.
SEC sets focus on crypto custody
A qualified custodian is usually a federally or state-chartered bank or savings organization, trust firm, registered broker-dealer, registered futures commission merchant, or foreign financial institution, according to the SEC.
To become a “qualified custodian” under the revised proposed guidelines, US and offshore enterprises would be required to demonstrate that all custodied assets, including cryptocurrency, are appropriately segregated. In addition to annual audits by certified public accountants, these custodians will be subject to extra transparency requirements.
Taking a shot at the crypto space
While Gensler stated that these modifications will “expand the scope” to encompass all asset classes, he took aim at the crypto industry.
Gensler also cited the track record of the business to argue that few crypto firms would be dependable enough to function as certified custodians.
“Make no mistake: Based upon how crypto platforms generally operate, investment advisers cannot rely on them as qualified custodians,” Gensler said.