The current wording does not clearly outline the specifics of what this development may entail; however, the overall sentiment implies that the agency remains committed to simplifying the process for conducting cryptocurrency business in the United States.
Historically, this has been a contentious issue.
In February 2023, when the agency previously announced its custody proposal, former Chair Gary Gensler issued a strong caution to the cryptocurrency industry. He emphasized, “Let there be no misunderstanding: Given the typical operations of crypto platforms, investment advisers should not depend on them as qualified custodians,” in reference to the proposed updates to the agency’s custody guidelines.
This proposal aimed to mandate that investment advisers secure their clients’ cryptocurrencies with a limited selection of “qualified custodians.” Typically, this would denote a chartered financial institution, a registered broker-dealer, or a futures commission merchant regulated by the Commodity Futures Trading Commission.
A diverse group of financial entities, including cryptocurrency platforms and even another regulatory body, expressed their concerns regarding the SEC’s approach to this proposal. Senior attorneys at the Small Business Administration indicated that the agency’s actions “significantly overlook the potential consequences,” which could jeopardize smaller advisory firms.
Furthermore, investment firm a16z described the proposal as “illegal, unworkable, and risky.”