SEC now taps into advisory and custody services in crypto

It has been stated that the US Securities and Exchange Commission (SEC), which has recently wanted to strictly monitor various areas of cryptocurrencies, especially decentralized finance, now aims to bring some rules and regulations in this area for investment companies and investment advisors.

William Birdthistle, director of the SEC's Investment Management Department, spoke about cryptocurrencies at the IAA Investment Advisory Compliance Conference. Referring to the introduction of crypto into our lives, Birdthistle stated that it is now time to bring order to this industry.

Birdthistle stated that there are uncertainties about how the custody law will be in particular, and said, “If I speak for investment advisors, I am aware that there are many uncertainties about whether consulting about cryptocurrencies, especially custody rules, is against compliance laws.”

Custody rules, also known as the Counseling Act in the US, require advisors to keep client securities with a registered and qualified custodian. Registered and qualified custodians are generally banks, brokers, and funds licensed at the federal or state level.

The custody service of Coinbase, the largest cryptocurrency exchange in the USA, and Anchorage Digital Bank are among the companies that already have this license.

While the SEC's regulations on the matter at the state level remain unclear. In the state of Wyoming, which has taken positive steps in cryptocurrencies recently, an asset management company called Two Ocean facilitated the investment of crypto money and became a "qualified custody service provider" and also received an "inaction guarantee" against the company in the state, and the SEC also made this decision. prompted the public to ask for feedback on the issue.

In its feedback, the SEC sought feedback on how digital assets are stored and what criteria are required by advisors when seeking a custody service provider.

Birthistle also said it plans to consider recommendations received on issues related to the use of securities in the digital asset space:

“The increasing opportunities to invest in securities using digital platforms such as robot advisors, online brokerage services, and mobile investment apps and portals present particular challenges. I look forward to evaluating the suggestions in the light of the comments we have received in this area.”

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