The United States Securities and Exchange Commission (SEC) plans to propose new rule changes this week that could affect the services that crypto companies can offer to their customers.
According to a February 14 Bloomberg report citing “people familiar with the matter,” The securities regulator is working on a draft proposal that would make it more difficult for crypto firms to hold digital assets on behalf of their clients as “qualified custodians.”
This could, in turn, affect the many hedge funds, private equity firms, and pension funds that work alongside such crypto companies.
According to those cited, a five-member SEC panel will vote on February 15 on whether the proposal moves on to the next phase.
A majority of votes – three out of five – will be needed for the rest of the SEC to officially vote on the proposal. If approved, the proposal will be modified with comments where necessary.
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While the SEC has deliberated on what should be required to be a qualified cryptocurrency custodian since March 2019, People familiar with the matter said it’s unclear what specific changes the US financial watchdog is seeking.
If finalized, Bloomberg explained that Some cryptocurrency firms may have to move their clients’ digital asset holdings elsewhere.
The report added that these financial institutions could be subject to “surprise audits” related to their custodial relationships or other ramifications.
The news of Wednesday’s ballot proposal comes after a Reuters report on Jan. 26 that suggested the SEC would soon go after Wall Street investment advisers for the way they have offered crypto custody to their clients.
In recent days, the SEC has been busy with Paxos Trust – the issuer of the Binance USD (BUSD) stablecoin –; that you think you issued as an unregistered security.
Paxos said they would be willing to “vigorously litigate” if necessary.
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