SEC Chairman Proposes Amendment to Federal Custody Rules to Cover ‘All Crypto Assets’
US Securities and Exchange Commission (SEC) Chairman Gary Gensler announced on Wednesday that he has “issued a proposal to expand and replace the role of qualified custodians”.
According to his proposal, all other asset classes, including cryptocurrencies, would be included in the custody rules in an expanded manner and companies providing all services to their clients would be required to register. In his further remarks, the Chairman states that this proposal covers all asset classes, including all types of crypto assets will cover.
If we talk, the Chairman of the Securities and Exchange Commission focused on four major proposed changes to the existing rules and he first of all made sure that my proposal would help clients to know how to manage client assets ” reasonably separate,” or take advantage of, and second, which for the first time would require advisors and qualified custodians to “enter into written agreements with each other that help guarantee the custodian’s safety.” Are”. Further, the executive also explains that the custodian is required to undergo annual assessment for public accounting reasons and they are included because it is the custodian who is able to provide many services and is a repository of many services as Provides account details, and provides records upon request.
Going further, he says, it would also determine how the safeguards of the Custody Rule are applied to discretionary trading and when an advisor is looking to buy or sell an investor’s assets toward his or her investments. If you try to sell it, it will definitely help, and besides, it “will also raise requirements for foreign financial institutions that serve as a qualified custodian as well as a qualified custodian or sub-custodian”. He further adds that “we can see that some trading services and lending platforms may claim to hold investors’ cryptocurrency in custody but this does not mean that they are a qualified custodian” as a qualified custodian. The Chairman of the Securities and Exchange Commission further elaborates that investment advisors cannot be relied upon as qualified custodians based on the business process by which crypto platforms typically operate, and the Chairman further pointing out that the regulations currently already cover “a significant amount of cryptocurrency assets” and noting that most crypto assets are “likely to be funds or crypto asset securities covered through the existing regulations.” “.
Additionally, the head of the Securities and Exchange Commission reiterated his concerns that crypto platforms are not segregating customer assets and that instead of properly segregating investors’ crypto, these platforms have sequestered those assets as their own. Has been combined with the planets of K or other investors. he says that “when these platforms go bankrupt, something that we have seen happen time and again – investors’ assets mostly wind up as failed assets and investors are left in court as Last year, several crypto firms filed for bankruptcy, including FTX, Celsius Network, Voyager Digital, Three Arrows Capital (3AC) and BlockFi”.
The head of the Securities and Exchange Commission has been active in the cryptocurrency world recently. Last week, the securities watchdog charged cryptocurrency exchange Kraken over its staking program. Additionally, the commission sent a notice to Paxos regarding the stablecoin Binance USD (BUSD) alleging that cryptocurrencies are definitely a security instrument and that Paxos is required to register under federal securities laws and that Meanwhile, Binance CEO Changpeng Zhao (CZ) warned of a “profound impact” on the cryptocurrency industry if BUSD is governed as a security.