• 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, 2021.
• If approved, the proposed rule would make it difficult for crypto firms to operate as “qualified custodians” for hedge funds, private equity firms, and pension funds.
U.S SEC To Vote On Crypto Rule
The United States Securities and Exchange Commission (SEC) is preparing a draft proposal that could potentially make it more difficult for crypto firms to act as qualified custodians for their clients’ digital assets. A five-member SEC panel will vote on the proposal February 15th, 2021 if a majority of three out of five members approve then it will proceed to be voted by the rest of the SEC members with possible amendments based on public feedbacks if approved.
How Could This Impact Crypto Firms?
If implemented, this new rule could have significant implications for cryptocurrency businesses offering custody services such as hedge funds, private equity companies and pension funds who are required to use qualified custodians when handling client assets. Thus, entities working with these companies may need to move their holdings elsewhere once the rule is enforced.
In 2020, an SEC staff member had mentioned that the agency was looking into who can be viewed as a qualified custodian for cryptocurrency assets and requested public input in order to address those concerns. This recent proposal lines up with other steps taken by regulators in order to minimize potential risks from digital currencies in regards to its impact on the broader financial system following some major crypto firm failures seen in 2022 such as FTX exchange and Voyager Digital brokerages.
What Is Next?
After approval from the voting panel, this new rule will be put out for public participation where people can give their opinion before being fully adopted by voting once again into effect after taking into account all feedbacks given by members of society at large..
This proposed regulation has potential implications both positive and negative depending on how it is interpreted which makes it important to stay informed about developments concerning cryptocurrencies so one can prepare ahead whether or not this regulation gets passed or not