SEC will target crypto firms that act as ‘qualified custodians. Report

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If the proposal is approved by a majority vote of the five members of SEC, it will move to the next stage. Other members of SEC will review it. News Own this piece in history. Collect this article as a NFT. The United States Securities and Exchange Commission (SEC), is reportedly going to propose new rules this week that could affect the services crypto firms offer their clients. Bloomberg reports that the securities regulator is currently working on a draft proposal to make it more difficult for crypto firms, who are “qualified custodians,” to hold client’s digital assets. This could have implications for the many pension funds, hedge funds, and private equity firms that work with such firms. According to the cited sources, the proposal will be voted on by a five-member SEC panel on February 15. To allow the rest of SEC to vote on the proposal, a majority vote of 3 votes from 5 will be required. If the proposal is approved, it will be amended with feedback if necessary. Yesterday, our Division of Examinations revealed its 2023 exam priorities. Read more — Gary Gensler (@GaryGensler), February 8, 2023
The SEC has been deliberating on what it should take to be a qualified custodian for cryptocurrencies since March 2019. However, people familiar with the matter say that they are not sure what changes the U.S. financial watchdog wants. Bloomberg reports that the SEC chair is warning crypto firms about possible surprise audits of their custodial relationships and other ramifications. Related: SEC chair issues warnings to crypto firms following action on Kraken staking. A Jan 26 Reuters report suggested that the SEC might soon go after Wall Street investment advisors about how they have offered crypto custody to clients. The SEC has been dealing with Paxos Trust, the stablecoin-issuer of Binance USD(BUSD), which they believe they issued as an unregistered security.