Lawmakers urged a US regulator not to further limit certain financial stakeholders in its proposed rule tightening cryptocurrency custody requirements.
Republican Rep. Mike Flood of Nebraska and Democratic Rep. Richie Torres sent a letter to the Securities and Exchange Commission last week, urging the regulator to “maintain a path for state-regulated custodians.”
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.
A worthy mentor The client maintains the funds and can be an institution such as a bank or a broker-dealer.
The SEC asks in its proposal whether Rule Should be limited to only a few banks, such as those subject to federal regulation.
“Given the small number of digital asset custodians in the market, the exclusion of state-regulated institutions from being eligible custodians would result in greater market concentration and an adverse effect on competition,” Torres and Flood said.
getting pushback
The rule proposal has faced some pushback since it was proposed on February 15.
Gary Gensler, chairman of the SEC at the time Said The proposal would “help ensure that advisors do not improperly access, loss or misappropriate investors’ assets.”
On the subject of crypto, Gensler said the rule already covers crypto.
“While some crypto trading and lending platforms may claim to be in custody of investors’ crypto, this does not mean they are qualified custodians,” Gensler said.
crypto exchange coinbase pushed against the proposal earlier this month, arguing that some parts needed changes.
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.
Grewal tweeted, “That said, like other recent SEC actions, this proposal unnecessarily singles out crypto and makes unfair assumptions about the custodial practices underlying the securities markets.”