{"id":17695,"date":"2023-02-16T01:46:34","date_gmt":"2023-02-16T01:46:34","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/sec-chairman-proposes-amending-federal-custody-rules-to-cover-all-crypto-assets-regulation-bitcoin-news\/"},"modified":"2023-02-16T01:46:34","modified_gmt":"2023-02-16T01:46:34","slug":"sec-chairman-proposes-amending-federal-custody-rules-to-cover-all-crypto-assets-regulation-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/sec-chairman-proposes-amending-federal-custody-rules-to-cover-all-crypto-assets-regulation-bitcoin-news\/","title":{"rendered":"SEC Chairman Proposes Amending Federal Custody Rules to Cover ‘All Crypto Assets’ \u2013 Regulation Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has proposed amending federal custody rules to cover \u201call crypto assets.\u201d The SEC chief said: \u201cThough some crypto trading and lending platforms may claim to custody investors\u2019 crypto, that does not mean they are qualified custodians.\u201d<\/strong><\/p>\n

Gary Gensler Proposes Including Crypto in Expanded Custody Rules<\/h2>\n

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, announced Wednesday that he has proposed changes to federal regulations \u201cto expand and enhance the role of qualified custodians.\u201d<\/p>\n

All asset classes, including crypto, would be included in the expanded custody rules under his proposal, and companies offering crypto custody services to their clients will be required to obtain registration. Gensler emphasized:<\/p>\n

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Today\u2019s proposal, in covering all asset classes, would cover all crypto assets.<\/p>\n<\/blockquote>\n

The SEC chairman proceeded to highlight four key proposed changes to the existing regulations. Firstly, the proposal will help ensure that customer assets \u201care properly segregated,\u201d he said. Secondly, for the first time, advisers and qualified custodians will be required to \u201center into written agreements with each other that help guarantee the custodian\u2019s protections,\u201d Gensler explained, adding that they include requiring custodians to undergo annual evaluations from public accountants, provide account statements, and provide records upon request.<\/p>\n

The proposal would also \u201cmake explicit that the custody rule\u2019s safeguards apply to discretionary trading \u2014 when an adviser would seek to buy or sell an investor\u2019s assets on behalf of an investor,\u201d Gensler described. Further, it would \u201cenhance requirements for foreign financial institutions that serve either as qualified custodians or as sub-custodians to a qualified custodian,\u201d he detailed.<\/p>\n

\u201cThough some crypto trading and lending platforms may claim to custody investors\u2019 crypto, that does not mean they are qualified custodians,\u201d the SEC chairman stressed, elaborating:<\/p>\n

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Based upon how crypto platforms generally operate, investment advisers cannot rely on them as qualified custodians.<\/p>\n<\/blockquote>\n

Current regulations already cover \u201ca significant amount of crypto assets,\u201d Gensler pointed out, noting that most crypto assets \u201care likely to be funds or crypto asset securities covered by the current rule.\u201d<\/p>\n

Reiterating his concerns that crypto platforms are not properly segregating customer assets, the SEC chairman said:<\/p>\n

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Rather than properly segregating investors\u2019 crypto, these platforms have commingled those assets with their own crypto or other investors\u2019 crypto.<\/p>\n<\/blockquote>\n

\u201cWhen these platforms go bankrupt \u2014 something we\u2019ve seen time and again recently \u2014 investors\u2019 assets often have become property of the failed company, leaving investors in line at the bankruptcy court,\u201d Gensler warned. Last year, a number of crypto firms filed for bankruptcy, including FTX<\/a>, Celsius Network<\/a>, Voyager Digital<\/a>, Three Arrows Capital<\/a> (3AC), and Blockfi<\/a>.<\/p>\n

The SEC has recently been active in the crypto space. Last week, the securities watchdog charged cryptocurrency exchange Kraken<\/a> over its staking program. The commission has also sent a Wells notice to Paxos<\/a> regarding stablecoin Binance USD (BUSD), alleging that the crypto is a security and that Paxos should have registered the offering under federal securities laws. Binance CEO Changpeng Zhao (CZ) subsequently warned of \u201cprofound impacts<\/a>\u201d on the crypto industry if BUSD is ruled as a security.<\/p>\n

Do you think SEC Chairman Gary Gensler\u2019s proposal will help or hurt the crypto industry? Let us know in the comments section below.<\/strong><\/em><\/p>\n

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\nKevin Helms <\/h6>\n

\nA student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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