• The U.S. Securities and Exchange Commission (SEC) has proposed a rule that would require registered investment advisors to store digital assets in „qualified custodians.“
• The proposal could complicate advisers‘ use of crypto platforms, as the list of qualified custodians consists of regulated financial institutions only.
• Coinbase Custody Trust Co. and BitGo may still be able to qualify as qualified custodians under the SEC’s new proposal.
SEC Proposes Investment Adviser Rule
The U.S. Securities and Exchange Commission (SEC) has proposed a new rule that would require registered investment advisors to store digital assets in “qualified custodians” from a narrow list of regulated financial institutions only. This means that crypto trading platforms, such as Coinbase or Bitgo, may not be eligible for this role anymore.
Impact on Crypto Platforms
The SEC’s proposal could complicate advisers’ use of crypto platforms, as it limits the number of qualified custodians they can use for their clients’ assets – including those in digital form. However, state-chartered trusts such as Coinbase’s Custody Trust Co., may still be able to qualify for the role of qualified custodian under the SEC’s new proposal.
Increased Regulatory Action
The SEC is increasing its regulatory action when it comes to cryptocurrency, which reflects its growing focus on this sector in recent years.. Through these measures, it aims to protect investors and promote fair markets while also monitoring developments within the industry closely.
Risks May Lurk for Others
Although some crypto businesses may still be able to meet these requirements if they are already established properly, other smaller companies might find it difficult or even impossible to do so due to the costs associated with becoming officially registered by the SEC – something which is required before being included within the list of ‘qualified custodians’ .
In conclusion, while some established crypto businesses may still be able to become qualified custodians after meeting certain criteria set by the SEC; others may struggle due increased complexity or cost implications associated with fulfilling these requirements effectively enough to make them approved candidates for this role.