• The US Securities and Exchange Commission (SEC) plans to propose new regulations this week that could affect the services crypto firms offer their clients.
• A five-member SEC panel will vote on the proposal on Feb. 15, with a majority vote of three out of five required to proceed to the next stage.
• If approved, the proposal could make it harder for crypto firms to hold digital assets for their clients, possibly forcing entities that work with them to move their holdings elsewhere.
SEC To Vote On New Rule Regarding Crypto Firms
The US Securities and Exchange Commission (SEC) is set to propose new regulations this week that could have an impact on the services offered by crypto firms. A five-member SEC panel will be voting on the proposed rule changes on February 15th, with a majority vote of three out of five required in order for it to proceed further.
Impact Of Proposed Changes
If approved, these proposed changes could make it more difficult for crypto firms to hold digital assets for their clients. Hedge funds, private equity firms and pension funds may find themselves in an awkward position if they currently use crypto firms as custodians – as these entities are typically required to use qualified custodians when holding client assets.
Feedback From Public Needed
After approval from the SEC panel, the proposal will then be put out for public participation which would allow people to provide feedback before it is finalized into a rule which can take effect. This follows an announcement made by an SEC staff member in 2020 regarding who can be considered a qualified custodian of crypto assets and requested feedback from members of the public at large.
Regulators Becoming More Cautious With Crypto
The new rules proposed by the regulator aligns with its plans towards curtailing risks associated with cryptocurrencies within wider financial systems following highly publicized failures from certain crypto companies such as FTX exchange and Voyager Digital brokerage in 2022.
It remains unclear what specific change the agency seeks but if implemented correctly, these measures could help ensure better safety protocols when dealing with digital asset management while also ensuring greater consumer protection against fraud or any other misappropriation schemes related cryptocurrencies or blockchain technology at large.