• The US SEC recently voted to expand the scope of the 2009 Custody Rules, which will affect crypto custodians.
• The new rules would require qualified custodians to properly segregate assets and comply with yearly audits conducted by public accountants, as well as adhere to additional transparency measures.
• SEC Chair Gary Gensler emphasized that the amendments would apply not only to cryptocurrencies, but all asset classes.
US SEC Seeks Expansion of Custody Rules in Crypto Sector
The United States Securities and Exchange Commission (SEC) recently held a five-member panel vote on a proposed amendment to its 2009 Custody Rules. Four out of five members voted in favor, which means that if officially approved, the amendment will affect crypto firms serving as custodians.
What Are The New Rules?
The amendment aims to make it more difficult for crypto firms to serve as custodians. To become a qualified custodian, domestic and offshore companies must ensure that all assets under custody are properly segregated and comply with yearly audits conducted by public accountants. Additionally, they must adhere to additional transparency measures mandated by the SEC. Chair Gary Gensler stated that these rules would extend beyond just cryptocurrencies and apply to all asset classes.
Cautions Against Unqualified Crypto Platforms
Gensler also cautioned against certain “crypto trading and lending platforms” who claim custody services without being qualified custodians. He stated that such platforms have commingled investors‘ crypto with their own or other investors‘, making them an unsafe option for managing people’s money.
SEC’s Move Towards Investor Protection
The proposed amendments demonstrate the SEC’s commitment towards investor protection within the cryptocurrency sector through stricter regulations on qualified custodianship services. If officially approved, these new rules may pave the way for increased trust in crypto investments from institutional investors in particular who prioritize safety when investing capital into digital assets.
Overall, this proposal from the US SEC seeks to expand the scope of custody rules in order to protect investors from fraudulent activities within the cryptocurrency sector such as commingling funds from different clients or mismanaging funds altogether due to lack of proper regulation or oversight of unqualified platforms claiming custody services without having been certified by federal or state entities like banks or trust companies etc