SEC Chair Says Crypto Trading Platforms are Not ‘Qualified Custodians’

SEC chair says crypto trading platforms are not 'qualified custodians', providing important improvements.

SEC chair says Crypto trading platforms are not 'qualified custodians', providing important improvements to the safety laws already in place.

Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC), rejected the notion that cryptocurrency platforms could serve as reliable qualified custodians for financial advisors.

Gensler said newly suggested rulemaking investment advisors turn to qualified stewards for the safekeeping of assets – including cryptocurrencies – make "important improvements" to current security rules. Gensler was speaking at an Investor Advisory Committee gathering on Thursday. He added that under those rules, cryptocurrency trades should not be regarded as secure.

Investment advisors are unable to depend on crypto trading and loan platforms as qualified custodians at present, according to Gensler. To be explicit, a cryptocurrency trading site is not automatically a qualified custodian just because it makes that assertion

The SEC head cited recent disasters in the cryptocurrency industry and noted that instead of going back to the customers directly, the property owned by customers on those platforms is now a part of the bankruptcy estate.

"The proposed regulation expands the custody rule to encompass all of an investor's assets, not just their money or stocks, by a provision made by Lawmakers in 2010. In reaction to the financial crisis and Bernie Madoff's frauds, Congress gave us additional authority to broaden the custody regulation. The extended custody regulation would aid in preventing advisors from misusing, abusing, or losing investors' funds "In his comments, Gensler said.