Coinbase’s chief legal officer called a new proposed US regulation requiring cryptocurrency custody requirements “misleading” and said some parts needed to be changed.
Securities and Exchange Commission rules proposed in february And it would require registered investment advisors to hold crypto with a qualified custodian, which would mandate certain requirements like segregation of investors’ assets.
The exchange has generally agreed to the proposal, Chief Legal Officer Paul Grewal said on Twitter, while Coinbase Custody Trust Company will remain a qualified custodian if the proposal is adopted.
A worthy mentor The client maintains the funds and can be an institution such as a bank or a broker-dealer.
“That said, like other recent SEC actions, this proposal unnecessarily excludes cryptocurrencies and makes unfair assumptions about the custodial practices underlying the securities markets,” Grewal tweeted Monday night.
At the time, SEC Chairman Gary Gensler said that some crypto platforms claim to have custody of investors’ crypto, but this does not mean they are qualified custodians, while also citing concerns about commingling assets. .
“Make no mistake: based on how crypto platforms generally operate, investment advisors cannot rely on them as qualified custodians,” Gensler said in February.
Grewal wants what has changed
The rule asks for comment on whether the definition of a qualified custodian should be limited to banks subject to federal regulation, but Grewal said the agency should recognize state trusts and state-regulated firms as qualified custodians.
“Thus including them as a class of qualified custodians promotes competition, efficiency and investor protection,” Grewal said in a letter sent to the SEC on Tuesday.
Grewal also proposed limiting exposure to non-qualified custodians as well as allowing sophisticated investors to negotiate their own custody arrangements.
a flood of letters came
At least 60 letters were submitted to the SEC as of May 8 from the US Small Business Administration, venture capital firm Andreessen Horowitz, among others.
Public Citizen, a non-profit consumer advocacy organization, supports the SEC’s changes to “bring law and order” to the industry.
“Currently, cryptocurrency trading is a deliberate flouting of law and order in the Wild West,” the organization said in its letter. “FTX is not the only exchange to have stolen customer funds. The number of bankruptcies and frauds in the cryptocurrency space is legion.