Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC), has proposed that bitcoin exchanges could not be considered “qualified custodians.” Speaking at an Investor Advisory Committee meeting on Thursday, Gensler disputed the notion that digital currency exchanges couldserve as reliable custodians for investment advisers.
“Investment advisers cannot trust them today as competent custodians,based on the way cryptocurrency trading and lending platforms normally work,” he stated.The remarks make reference to a newly put-out regulation by US authorities and the SEC that would require investment advisers to look for competent custodians for the custody of all kinds of assets, including cryptocurrency.
The SEC Proposal Aims to Tighten the Guidelines
The SEC proposalaims to tighten the guidelines for registered investment advisers’ asset protection measures. Instead of only funds and securities, as the existing rules mandate, the plan would extend the norm to embrace all forms of assets, including digital currencies, private securities, real estate, and derivatives.
The plan offers “substantial improvements,” according to the SEC president, to the current safety regulations. According to that publication, he also stated that Bitcoin exchanges should not be regarded as safe under such rules.
Although the regulations do not just apply to the cryptocurrency industry, the president had earlier urged that they do so in reaction to the recent failure of well-known companies like FTX.
“Regulations are there for a Reason”
According to CoinDesk, they appeared to reiterate these ideas at the recent event. They noted that bankruptcies had brought attention to the need to ensure client asset ownership so that in such circumstances, they do not become entangled in platforms and subject to the legal bankruptcy process.
Recently, Gemini co-founder Tyler Winklevoss made sure that the exchange would meet the requirements to be a chartered custodian under the new standards that the SEC had suggested. In a tweet, Tyler maintained that the platform had been registered in New York since 2015 as a trust corporation that adheres to the Banking Law.
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