The U.S. Securities and Exchange Commission (SEC) is set to propose a rule that would effectively require registered investment advisers to store digital assets outside of the cryptocurrency industry.
The rules, set to be proposed by the U.S. Securities and Exchange Commission (SEC) on Wednesday, would expand the agency’s existing rules that require investment advisers to place client funds and securities in the custody of a “qualified custodian.” The new version, if approved, would add protection requirements for any assets entrusted by investment advisers, including cryptocurrencies.
Currently, cryptocurrency trading and lending platforms often provide custody services to cryptocurrency clients, but they are not “qualified custodians” under the rules. Under SEC regulations, an appropriate custodian is generally a chartered bank or trust company, an SEC-registered broker-dealer, or a futures commission merchant registered with the Commodity Futures Trading Commission (CFTC).
SEC Chairman Gary Gensler said in a statement that they cannot be relied upon as qualified custodians. Although some cryptocurrency trading and lending platforms may claim to custody investors' cryptocurrencies, this does not mean that they are qualified custodians. The SEC's proposal also stated that qualified custodians will be subject to independent audits, regular disclosures, and will be required to segregate customer assets into accounts under customer identities. (CoinDesk)
