The U.S. Securities and Exchange Commission (SEC) plans to propose rule changes that would make it difficult for cryptocurrency firms to hold digital assets on behalf of their clients as “qualified custodians”, reported Bloomberg Tuesday.
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- Hedge funds, pension funds and other institutional investors in digital assets are required to use qualified custody services to protect client funds.
- Proposal rule change would make it more difficult for cryptocurrency businesses to become “qualified custodians” to hold digital assets on behalf of customers.
- In 2020, the SEC opened a consultation to determine whether state-chartered trust companies were qualified custodians. Many crypto asset custodians are state-licensed trust companies, including Coinbase Custody Trust, Paxos Trust, and Fidelity Digital Assets.
- The new rule, which includes no-warning audits of custodial relationships, may require institutions to find other companies to protect customers’ digital assets, according to the Bloomberg report.
- A five-member SEC panel will vote Feb. 15 to determine whether the proposal will proceed to the next stage for public comment.
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