- Crypto-Backers React to SEC Chairman Gary Gensler’s Surprising Remarks
- Gensler Points to a Proposed Regulation and Explains Why He Believes Cryptocurrency Exchanges Don’t Qualify as Custodians
The U.S. Securities and Exchange Commission (SEC) has set off a flurry of conversations among crypto-enthusiasts following Gary Gensler’s comments. The SEC Chairman voiced his opinion during a Thursday presentation at the Investor Advisory Committee meeting.
Cryptocurrency exchanges that are currently operating in the U.S. do not meet the requirements to act as custodians, according to Gensler. He had made similar statements in the past, and was evidently eager to press the point.
These remarks coincided with a proposal that investment advisors must use qualified custodians to safeguard their assets. This includes digital currencies like Bitcoin and Ethereum.
It is based on the way crypto trading and lending platforms operate, investment advisors cannot rely on them as qualified custodians. I want to be clear: just because a crypto trading platform claims to be a qualified custodian doesn’t mean it is.
Gary Gensler explained that the proposed regulation is in line with the rules mandated by Congress after the economic crisis, which focused on ensuring that investors’ assets were prioritized.
The proposal follows a mandate from Congress in 2010 to expand the custody rule to cover all investor assets, not just funds or securities. It was necessary to address the financial turmoil. Bernie Madoff’s Ponzi scheme is a good example.
The SEC is striving to implement stricter rules that will protect investors’ assets and Gensler’s comments are a reflection of that. This is a major step forward for the crypto world and will likely generate much more debate.
The U.S. Securities and Exchange Commission (SEC) has recently proposed an expanded custody rule to help protect investors from crypto-related fraud. Gary Gensler, the newly appointed SEC chair, is the driving force behind this move.
The crypto-market has been anticipating a response from the SEC to address issues such as crypto-staking and the fear of potential bans on the activity. The proposal highlighted that Ethereum and other cryptocurrencies should be kept in a safe, regulated environment when investors wish to stake their assets.
Charles Hoskinson, the CEO of Cardano, has voiced his support for the new rule, stating that it would be detrimental to the entire market if staking was banned. Coinbase’s Brian Armstrong also backed the move, declaring that customers in the United States should still be able to access digital assets via the staking program. Although, the SEC requires that all providers of staking-as-a-service be registered and should be transparent when it comes to the disclosure and protection of investors.
The new custody rule will help prevent fraudulent activity and ensure that advisers are not misusing or abusing investors’ funds. Crypto News Flash advises readers to conduct their own research before taking any action related to cryptocurrencies.
