• The US Securities and Exchange Commission (SEC) is proposing new regulations that could make it difficult for crypto firms to operate as qualified custodians.
• A five-member SEC panel will vote on the proposal on Feb. 15 and a majority of three out of five votes is required for the proposal to proceed.
• If approved, entities working with crypto firms will have to move their clients’ holdings elsewhere.

US SEC Proposes New Rule for Crypto Firms

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.

Proposal Vote

A five-member SEC panel will vote on the proposal on Feb. 15, 2023 at 9:55 am by Samuel Mbaki Wanjiku Crypto Regulation Share Share on Facebook Share on Twitter Share on LinkedIn Share on Telegram Follow Us on Google News 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”. A majority vote of three out of five is required to proceed to the next stage.

Potential Impact

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 because these entities are required to use qualified custodians to hold their clients’ assets.

Background Information

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. This new proposal aligns with these efforts in curtailing risks crypto could pose to financial systems worldwide. Regulators have become highly cautious about cryptocurrencies after several spectacular failures in 2022 such as FTX exchange and Voyager Digital brokerages collapse amidst allegations of fraud or negligence in managing client funds or assets.

Public Participation

After approval, this rule change proposal will be put out for public participation in order for citizens within United States borders can give their opinion regarding its implementation or potential effects upon society at large before finalizing its implementation into law or regulation standards within this jurisdiction.. The regulator will then vote again after getting feedback from stakeholders before taking effect fully upon implementation date set forth by statutory body responsible overseeing securities markets within United States jurisdiction