SEC Rule Change May Put Pressure on Crypto Platforms
The US Securities and Exchange Commission (SEC) has proposed new rules to regulate the custody of cryptocurrencies by investment advisers such as hedge funds and pension funds. The proposal would require such advisers to use qualified custodians to hold assets, and it would also create new requirements for qualified custodians. The rule expands the qualified-custodian requirements to include virtually any assets that an adviser might hold in a clients name, including all cryptocurrencies, and some physical assets like artwork. The proposal would limit how asset managers can handle customers crypto assets, but it wouldnt impose new requirements on individual investors who manage their own portfolios. While traditional qualified custodians have typically been banks, trust companies, and broker-dealers, the idiosyncrasies of keeping assets like bitcoin safe from theft or hacks have led Coinbase Global and similar crypto platforms to start offering the service. SEC Chair Gary Gensler has repeatedly expressed concerns that “crypto firms custody practices might not clear the legal hurdles necessary to keep their customers assets safe in the event of bankruptcy”. “The proposal would also limit how asset managers can handle customers crypto assets, citing features of cryptocurrencies that could make them difficult to safeguard in compliance with the