According to recent reports, the United States Securities and Exchange Commission (SEC) intends to propose new regulation changes this week that might have an effect on the kind of services that cryptocurrency businesses are permitted to provide their customers.
According to a report that was published on February 14 by Bloomberg, which cited “people familiar with the matter,” the securities regulator is working on a draft proposal that would make it more difficult for cryptocurrency companies to act as “qualified custodians” on behalf of their customers’ digital assets.
This might, in turn, have an effect on the many hedge funds, private equity companies, and pension funds who collaborate with cryptocurrency startups.
Those individuals who were quoted said that on February 15 a five-person SEC panel would decide on whether or not the plan will advance to the next level.
In order for the remaining members of the SEC to cast an official vote on the proposal, they will need to achieve a majority vote of three votes out of five. If the idea is accepted, it will be revised based on the input provided wherever required.
People who are aware with the situation have said that it is not obvious what particular modifications the United States Financial Watchdog is seeking. This is despite the fact that the SEC has been deliberating on what should be necessary to be a certified custodian of cryptocurrencies since March 2019.
According to Bloomberg, if the deal is confirmed, some cryptocurrency businesses may be required to relocate the digital asset holdings of their customers to another location.
According to the study, these financial institutions may be exposed to “surprise audits” on their custody ties or other ramifications. This information was included in the report.
After a story published on January 26 by Reuters said that the SEC may soon investigate Wall Street financial advisors over how they’ve given cryptocurrency custody to their customers, the news of the vote proposal that will be held on Wednesday comes as a surprise.
The Securities and Exchange Commission (SEC) has been quite busy in recent days dealing with Paxos Trust, the issuer of the Binance USD (BUSD) stablecoin. The SEC is of the opinion that Paxos Trust issued the cryptocurrency in the form of an unregistered security.
Paxos said that they were willing to “vigorously litigate” the matter if it came to it.