The Securities and Exchange Commission’s (SEC) plan might put further pressure on bitcoin exchanges.
The Wall Street Journal stated on February 15 that cryptocurrency platforms like Coinbase, which have fought SEC regulation and asserted that their products are not securities, may be impacted by the increased criteria being suggested for organizations holding assets for investment advisors.
The SEC’s proposed modifications, which were made public on Wednesday, would increase the use of the audit clause and expand the scope of the custody rule from only client money and securities to include any assets held by an investment advisor, according to the agency.
Over decades, investment managers have been required to hold client assets and securities with a licensed custodian, but some cryptocurrency platforms have claimed they are exempt from these regulations, according to the WSJ investigation.
Due to the difficulties in keeping cryptocurrency secure, platforms like Coinbase have begun to act as certified custodians, many ways banks and broker-dealers did in the past with conventional assets, according to the article.
In a statement published on Twitter on Wednesday, Coinbase Chief Legal Officer Paul Grewal stated: “Coinbase Custody Trust Co. is a Qualified Custodian today and will be a Qualified Custodian tomorrow.
The federal regulatory body reportedly sent Paxos, a blockchain infrastructure and financial services platform regulated in New York, a Wells Notice on Monday (Feb. 13), informing the cryptocurrency company that it intends to take enforcement action against it for breaking federal investor protection laws.
