By a vote of 4-1, a panel of the United States Securities and Exchange Commission (SEC) decided to approve a proposal that, if implemented, would make it more difficult for companies that deal in cryptocurrencies to act as custodians of digital assets in the future. This proposal could make it more difficult for companies to act as custodians of digital assets. There were five people on the panel altogether.
According to a statement that was issued by SEC Chairman Gary Gensler on February 15, the proposal, which has not yet been officially approved by the SEC, recommends amendments to the “2009 Custody Rule” that will apply to custodians of “all assets,” including cryptocurrencies. This rule will apply to custodians of “all assets,” including cryptocurrencies, according to the statement. The “2009 Custody Rule” would be updated to include these modifications.
According to Gensler, at the current moment there are a number of cryptocurrency trading platforms that are not in reality “qualified custodians” despite the fact that they are promoting the provision of custody services.
According to the Securities and Exchange Commission (SEC), a qualified custodian is typically a bank or savings association that is federally or state-chartered, a trust company, a registered broker-dealer, a registered futures commission merchant, or a financial institution that is located outside of the United States. In addition, a qualified custodian must be able to demonstrate that it meets the requirements of the SEC.
These custodians will be required to jump through additional hoops such as annual audits from public accountants, among other transparency measures, as part of the newly proposed rules. In addition, U.S. and offshore companies will be required to ensure that all custodied assets, including cryptocurrencies, are properly segregated in order to become a “qualified custodian.” These new rules were proposed by the Financial Stability Oversight Council (FSOC). To achieve the status of “certified custodian,” businesses based in the United States or abroad would further be required to guarantee the safety of any assets under their care.