Home Technology SEC proposed rule targets crypto custodians • businessroundups.org

SEC proposed rule targets crypto custodians • businessroundups.org

by Ana Lopez
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Rule is designed to properly segregate customer assets to protect users

The American securities and Exchange Committee suggested a new rule on Wednesday that could further corner crypto companies as regulators continue to crack down on the space.

The SEC voted 4 to 1 in favor of a proposal that would direct registered investment advisers (RIAs) — such as asset managers or hedge funds — to hold clients’ money and securities with qualified custodians such as a bank, broker-dealer or trust company when storing digital assets, leaving crypto companies mainly on the fringes.

The proposal aims to keep client assets properly segregated, so if an advisor or custodian files for bankruptcy or becomes insolvent, it could protect users’ assets, the SEC said.

“If there is anything we should learn from the collapse of the FTX, it is that assets should be stored until they are needed for trading by third-party, qualified, regulated and insured custodians,” Mike Belshe, CEO of BitGo, told businessroundups.org. “This creates a check and balance for verifying reserve assets under the control of an exchange.”

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