The Securities and Exchange Commission’s (SEC) approach might put more strain on bitcoin exchanges.
According to the Wall Street Journal, cryptocurrency platforms like Coinbase, which have opposed SEC regulation and maintained that their products are not securities, may be impacted by the expanded requirements being proposed for organizations storing assets for investment advisers.
According to the SEC, the proposed changes, which were made public on Wednesday, would boost the use of the audit clause and broaden the scope of the custody rule from solely client money and securities to encompass any assets held by an investment advisor.
Throughout the years, investment managers have been required to keep client money and securities with a licensed custodian, but according to the WSJ research, some cryptocurrency platforms have claimed they are free from these requirements.
According to the report, because of the problems in keeping bitcoin secure, platforms such as Coinbase have begun to function as certified custodians, much like banks and broker-dealers did in the past with traditional assets.
“Coinbase Custody Trust Co. is a Qualified Custodian today and will be a Qualified Custodian tomorrow,” said Coinbase Chief Legal Officer Paul Grewal in a statement posted on Twitter on Wednesday.
The federal regulatory body reportedly sent Paxos, a blockchain infrastructure and financial services platform regulated in New York, a Wells Notice on Monday (Feb. 13), informing the cryptocurrency company that it intends to take enforcement action against it for breaking federal investor protection laws.
