In response to the SEC’s proposal to amend its custody rule, the Blockchain Association and Andreessen Horowitz have filed letters of opposition. The Blockchain Association claimed that the rule would limit investment in digital assets and could leave investors’ assets at more risk. Meanwhile, Andreessen Horowitz stated that the rule could prevent registered investment advisers from transacting with crypto exchanges and violate the SEC’s duty of care requirements.

The proposal, which has not yet been approved by the SEC, aims to impose more stringent rules on investment advisers in the custody of assets, including crypto. The proposed measures include proper segregation of assets and annual audits from public accountants, among other transparency measures.

The SEC’s Chair, Gary Gensler, has specifically targeted crypto exchanges with the rule, claiming that some crypto trading platforms offering custody services are not qualified custodians. However, even within the SEC, Commissioner Hester Pierce has questioned the rule’s workability and breadth, suggesting that it appears to be targeting crypto and crypto-related companies.

The Blockchain Association and Andreessen Horowitz have both argued that the rule exceeds the SEC’s authority and would have a negative impact on investment in digital assets. They have also claimed that the proposed measures would prevent investment advisers from using crypto and could leave investors’ assets at greater risk.

Despite opposition from industry proponents and within the SEC itself, the proposal remains under consideration. It is yet to be seen whether the SEC will make any changes to the rule in response to the letters of opposition.

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