Lawmakers urged a US regulator to not additional restrict sure monetary stakeholders in its proposed rule tightening cryptocurrency custody necessities.
Republican Rep. Mike Flood of Nebraska and Democratic Rep. Ritchie Torres of New York despatched a letter to the Securities and Change Fee final week, urging the regulator to “preserve a pathway to state-regulated custodians.”
The Securities and Change Fee rule was proposed in February and would require registered funding advisers to maintain crypto with a professional custodian, which might mandate sure necessities akin to segregating buyers’ property.
A qualified custodian maintains shopper funds and will be entities like a financial institution or broker-dealer.
The SEC asks in its proposal if the rule needs to be narrowed to solely sure banks, akin to these topic to federal regulation.
“Given the very small variety of digital asset custodians within the market, excluding state-regulated establishments from changing into certified custodians would result in larger market focus and adversely have an effect on competitors,” Torres and Flood mentioned.
The rule proposal has garnered some pushback because it was proposed on Feb. 15.
On the time SEC Chair Gary Gensler said the proposal “would assist be sure that advisers don’t inappropriately use, lose, or abuse buyers’ property.”
On the subject of crypto, Gensler mentioned the rule already covers crypto.
“Although some crypto buying and selling and lending platforms could declare to custody buyers’ crypto, that doesn’t imply they’re certified custodians,” Gensler mentioned.
Crypto change Coinbase pushed again towards the proposal earlier this month, arguing that some elements should be adjustments.
The change typically agrees with the proposal, mentioned Chief Authorized Officer Paul Grewal on Twitter, whereas including that Coinbase Custody Belief Firm will stay a professional custodian if the proposal is adopted as is.
“That mentioned, like different current SEC actions, this proposal unnecessarily singles out crypto and makes inappropriate assumptions about custodial practices based mostly on securities markets,” Grewal tweeted.