Crypto exchange, Coinbase, and crypto bank. Anchorage Digital, have accepted the US Securities and Exchange Commission (SEC) proposal, stating they are OK with it. The proposal concerns the safeguarding of clients’ assets.
Announcing this in a Twitter post, Coinbase stated it believes the “state” system has always been effective, and the history of clients’ assets being safe shows that.
The SEC proposed a new rule under the Investment Adviser’s Act of 1940, addressing how investment advisers guard their clients' assets. As a result, all SEC-registered investment advisers will be requested to put clients’ assets, including crypto assets, into qualified custodians.
These qualified custodians come from a narrow list of regulated financial institutions, not just any crypto platform. Also, the safeguarding rule states the custodians do not maintain custody of the assets if it does not have control or possession of that asset.
The possession or control of assets means that the qualified custodian is expected to participate in any change that will benefit the owners of those assets. This ensures account statement integrity and reliability.
According to a statement by the SEC,
“The proposal maintains the core purpose of protecting client assets from loss, misuse, theft, or misappropriation by, and the insolvency or financial reverses of, the adviser and maintains the Commission’s ability to pursue advisers for failing to properly safeguard client assets under the Act’s antifraud provisions.”
Some of the qualified custodians include Coinbase Custody Trust Co. and Anchorage Digital. The Chief Legal Officer at Coinbase, Paul Grewal, stated he was happy that SEC recognized the firm as a qualified custodian and it hopes to remain one. He also advised SEC to commence the rule-making process on what should be regarded as crypto assets.
Anchorage also stated it would work with all stakeholders to ensure that the transition minimizes disruption to the digital asset ecosystem.
