U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has pushed back against the idea that crypto exchanges can be safe qualified custodians for investment advisors.
At an investor advisory committee meeting on Thursday, Gensler said a recently proposed rule directing investment advisers to find qualified custodians to store assets, including cryptocurrencies, is an “important enhancement” to existing protections. He also said crypto exchanges should not be considered safe under those guidelines.
Gensler said that based on the way cryptocurrency trading and lending platforms generally operate, investment advisers cannot rely on them as qualified custodians, and to be clear: just because a cryptocurrency trading platform claims to be a qualified custodian does not mean it is.
The SEC chairman pointed to recent bankruptcies in the crypto industry, noting that property held by customers on those platforms is now part of the bankruptcy estate, rather than being returned directly to customers. (CoinDesk)