A proposal that would make it more challenging for cryptocurrency companies to act as digital asset custodians in the future was approved by a five-member panel of the United States Securities Exchange Commission (SEC) by a 4-1 vote.
According to a Feb. 15 statement from SEC Chairman Gary Gensler, the proposal, which has not yet been formally authorised by the SEC, recommends changes to the “2009 Custody Rule” that will apply to custodians of “all assets,” including cryptocurrencies.
Currently, according to Gensler, some cryptocurrency trading platforms that offer custody services are not “qualified custodians” in the truest sense of the term.
A qualified custodian is typically a federally or state-chartered bank or savings organisation, trust firm, registered broker-dealer, registered futures commission merchant, or foreign financial institution, according to the SEC.
According to the recently proposed rules, U.S. and offshore companies would also need to make sure that all custodied assets, including cryptocurrencies, are properly segregated. These custodians would also need to pass additional requirements, like annual audits from public accountants, among other transparency measures.
Gensler took aim at the cryptocurrency business especially when he warned that these modifications would “expand the scope” to all asset classes.
The SEC chairman said, When these platforms fail—something they have seen often recently—investors’ assets frequently become the property of the collapsed business, putting investors in line at the bankruptcy court.
Gensler also suggested that few cryptocurrency companies would be trustworthy enough to fulfil the requirements of certified custodians based on the history of the sector.
Gensler’s ideas, however, are not supported by every member of the SEC.
