SEC proposes new crypto custody rules for investment advisers and funds

Abstract:The regulator issued a proposed rule for custody, marking a swan song for its inaugural Crypto Task Force chief, Commissioner Hester Peirce, who exits this week.

According to the 760-page proposal, the SEC will allow for self-custody by advisers seeking to hold their clients' funds. The agency is using the term “self-custody” as an asset management firm practice, not how crypto companies typically use the term. It would first require that an adviser cant find a qualified custodian ready to take the assets, which would likely be an unusual circumstance after the rule is implemented, and it also requires certain expertise for the investment firm to hold crypto assets. Additionally, that ability to hold their own clients assets would have to be reviewed every quarter to see if a custodian has become available, an SEC official said.

The official granted that the circumstance for self-custody — which stems from an industry request to the Crypto Task Force — would likely be unusual, though it could apply to a newly launched token that custodians didn't yet support.

Atkins said that existing custody rules “were designed to protect the assets of advisory clients and regulated funds from loss, theft, misuse, and misappropriation,” but they only consider “the custody and safekeeping only of traditional assets — an untenable situation in the 21st century.”

The newly proposed rule, open for a 60-day public comment period, would also permit the use of state-chartered trusts as custodians.

Disclaimer

The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
Previous Post

African businesses turn to stablecoins to cut payment delays, Kora CEO says

Next

Wall Street arrived in NEAR just as a $4 billion-a-month app got hacked