US SEC to vote on new rule overseeing crypto firms as qualified custodians
Per a recent Bloomberg report, the commission is working on a draft proposal that would make it difficult for crypto firms to operate as “qualified custodians”.
The US Securities and Exchange Commission (SEC) plans to propose new regulations this week that could affect the services crypto firms offer their clients.
Persons familiar with the matter disclosed that the SEC plans to propose rule changes on Wednesday that could make it harder for crypto firms to hold digital assets for their clients.
However, the specific change that the agency seeks to make is unclear, according to people who did not wish to be identified since details have not yet been released.
A five-member SEC panel will vote on the proposal on Feb. 15. A majority vote of three out of five is required to proceed to the next stage.
If it passes, the proposal will be voted on officially by the rest of the SEC and amended with feedback if approved.
If the new rule is implemented, hedge funds, private equity firms, and pension funds could have a more challenging time working with crypto firms.
This is because these entities are required to use qualified custodians to hold their clients’ assets.
If the proposal goes through, it would mean that entities that work with crypto firms will have to move their clients’ holdings elsewhere.
In 2020, an SEC staff said that the agency was grappling with the question of who could be a qualified custodian of crypto assets and requested feedback from the public.
Crypto clampdown
The new proposal aligns with the SEC’s plans to curtail risks crypto could pose to the broader financial system.
Regulators have become highly cautious about crypto after the spectacular failures of crypto firms in 2022, including crypto exchange FTX and broker Voyager Digital.
After approval, the SEC proposal will be put out for public participation. The regulator will then have to vote again to finalize the rule after getting feedback for it to take effect.
