SEC May Ban Crypto Firms from Storing Digital Assets
2023.02.14 12:25
SEC May Ban Crypto Firms from Storing Digital Assets
By Tiffany Smith
Budrigannews.com – The Securities and Exchange Commission (SEC) of the United States is said to be planning to make a new rule change this week that could have an effect on the services that crypto firms can provide to their customers.
The securities regulator is working on a draft proposal that would make it difficult for crypto firms to hold digital assets on behalf of their clients as “qualified custodians,” according to a report from Bloomberg on February 14 that cited “people familiar with the matter.”
The numerous hedge funds, private equity firms, and pension funds that collaborate with crypto companies may also be affected by this.
A five-member SEC panel will decide on February 15 whether the proposal moves on to the next stage, according to those cited.
For the remaining members of the SEC to officially vote on the proposal, a majority vote of three out of five will be required. The proposal will be modified with any necessary feedback if approved.
Yesterday, our Division of Examinations announced its 2023 examination priorities.
Even though the Securities and Exchange Commission (SEC) has been debating what should be required to be a qualified custodian of cryptocurrencies since March 2019, people who are familiar with the situation stated that it is unclear which specific changes the U.S. financial regulator is seeking.
According to Bloomberg, some cryptocurrency businesses may be required to relocate their customers’ digital asset holdings if the agreement is approved.
In addition, the report mentioned that these financial institutions might face “surprise audits” regarding their custodial relationships or other consequences.
Following a Reuters report on January 26 that suggested the SEC would soon pursue Wall Street investment advisers over how they have offered crypto custody to their clients, the proposal for Wednesday’s vote comes as news of the proposal.
The Binance USD (BUSD) stablecoin’s issuer, Paxos Trust, and their suspicions that it was issued as an unregistered security have occupied the SEC’s attention recently.
Paxos stated that they would be ready to “vigorously litigate” in the event of a need.
