Qualified Crypto Custodians: SEC Proposal Could Impact All
• The U.S. Securities and Exchange Commission (SEC) is introducing a proposal that would require investment advisers to use only „qualified custodians“ for their crypto assets.
• Coinbase’s Custody Trust Co. and BitGo are among the state-chartered trusts that may be able to qualify under this new rule.
• Anchorage Digital Bank, which holds a federal charter from the Office of the Comptroller of the Currency (OCC), is also poised to meet SEC standards as a qualified custodian.
SEC Proposal Could Complicate Advisers’ Use of Crypto Platforms
The U.S. Securities and Exchange Commission (SEC) has proposed a rule that could require investment advisers to make hard decisions about how they keep clients‘ crypto assets safe from theft or loss. The agency’s proposal states that SEC-registered investment advisers must put all of their clients‘ assets, including crypto assets, into “qualified custodians” — which must come from a narrow list of regulated financial institutions, not merely any crypto trading platform.
Coinbase and BitGo May Qualify Under Proposed Rule
State-chartered trusts such as Coinbase’s Custody Trust Co., and BitGo may still be able to qualify in this role according to the SEC’s proposal. Paul Grewal, Coinbase’s chief legal officer said in a statement that he is confident that Coinbase Custody Trust Co., which is chartered by New York, will remain as a qualified custodian following Wednesday’s proposal by the SEC. Similarly, Anchorage Digital Bank—which holds a federal charter from the Office of the Comptroller of the Currency (OCC)—has reassured investors it is well prepared to meet SEC standards as an approved qualified custodian for digital assets.
Risks May Lurk For Other Crypto Businesses
Despite these assurances from some crypto businesses, others may find themselves at risk due to this proposed rule change by the SEC because their services may not meet its requirements for being considered “qualified custodians.“ Furthermore, there have been questions raised about whether blockchain networks themselves can act as qualified custodians—but so far those questions remain unanswered pending further study by industry lawyers and lobbyists on exactly what qualifies according to this new rule released by the SEC earlier this week.
CoinDesk Deputy Managing Editor Weighs In
Jesse Hamilton CoinDesk’s deputy managing editor for global policy and regulation believes this proposed rule by the SEC could complicate advisors‘ use of crypto platforms depending on how it is interpreted when it comes into effect later this year or early next year if finalized after public comment period ends in April 2021.. He does however acknowledge that some crypto businesses like Coinbase and Anchorage Digital appear ready for whatever changes might come with this new ruling .
The proposed rule by US Securities & Exchange Commission will bring much needed clarity around who can legally store digital asset investments while ensuring they are kept safe from theft or loss; but at same time create complications for other non compliant businesses who do not fit within its definition of „qualified custody“. What remains certain however is companies like Coinbase and Anchorage Digital have taken steps necessary to ensure they are ready no matter what changes come with this new ruling when it goes into effect later 2021 or early 2022