SEC Chair Proposes Crypto Custody Rule Changes Requiring More Regulatory Approval

• On Wednesday, the Securities and Exchange Commission (SEC) proposed significant amendments to federal regulations, which were passed by a 4-1 vote.
• SEC officials emphasized that the proposed amendments did not address the issue of which cryptocurrencies the SEC considers securities.

SEC Proposes New Rules for Cryptocurrency Custody

The Securities and Exchange Commission (SEC) has proposed new rules that would require companies that hold digital assets for customers to register with the agency as broker-dealers. The rules would also put in place a minimum financial requirement and require firms to maintain certain records and provide customers with certain disclosures.

The proposed rules are a significant shift in how the SEC regulates the custody of digital assets, which are not currently covered by existing rules. The SEC’s move is seen as a way to protect investors from potential risks associated with the custody of digital assets.

The proposed rules would require firms that hold digital assets for customers to:

• Register with the SEC as broker-dealers.
• Meet a minimum financial requirement.
• Maintain certain records.
• Provide customers with certain disclosures.

The rules would also require firms to:

• Segregate customer assets from the firm’s own assets.
• Hold customer assets in accounts that are designed to protect the assets in the event of the firm’s bankruptcy or other insolvency.

The SEC’s proposed rules are still in the early stages, and it is unclear when they will be finalized. However, the rules are a sign that the SEC is taking a more active role in regulating the cryptocurrency industry.

The SEC’s proposed rules have been met with mixed reactions from the cryptocurrency industry. Some industry participants have welcomed the rules, saying that they will help to protect investors. Others have criticized the rules, saying that they are too burdensome and will stifle innovation in the cryptocurrency industry.

It remains to be seen how the SEC’s proposed rules will be finalized. However, the rules are a significant development in the regulation of the cryptocurrency industry.

Impact of the Proposed Rules

The proposed rules would have a significant impact on the cryptocurrency industry. The rules would require firms that hold digital assets for customers to register with the SEC as broker-dealers. This would mean that these firms would be subject to the SEC’s rules and regulations, including the anti-fraud provisions of the securities laws.

The rules would also require firms to meet a minimum financial requirement. This would mean that these firms would need to have a certain amount of capital in order to operate.

The rules would also require firms to maintain certain records. This would mean that these firms would need to keep track of all transactions involving digital assets.

The rules would also require firms to provide customers with certain disclosures. This would mean that these firms would need to tell customers about the risks associated with holding digital assets.

The proposed rules are still in the early stages, and it is unclear when they will be finalized. However, the rules are a sign that the SEC is taking a more active role in regulating the cryptocurrency industry.

Conclusion

The SEC’s proposed rules are a significant development in the regulation of the cryptocurrency industry. The rules would require firms that hold digital assets for customers to register with the SEC as broker-dealers. This would mean that these firms would be subject to the SEC’s rules and regulations, including the anti-fraud provisions of the securities laws.

The rules would also require firms to meet a minimum financial requirement, maintain certain records, and provide customers with certain disclosures. The proposed rules are still in the early stages, and it is unclear when they will be finalized. However, the rules are a sign that the SEC is taking a more active role in regulating the cryptocurrency industry.