A proposal by the US securities regulator to tighten guidelines round crypto custody has been met with opposition from not less than two proponents of the business, based on lately filed letters.
On Might 8 — the deadline for feedback on the proposal — crypto business advocacy physique Blockchain Affiliation filed its letter to the Securities and Change Fee (SEC) criticizing its proposal to amend its custody rule.
Three days earlier, the same letter was despatched by Web3 enterprise capital fund Andreessen Horowitz (a16z).
Marisa Tashman Coppel, a coverage lawyer on the affiliation, tweeted on Might 8 that the rule would “drastically curtail funding in digital belongings” and claimed that in its present kind, the rule is “illegal.”
1/ Immediately, @BlockchainAssn filed a remark letter to the SEC’s proposed custody rule. With suggestions, we clarify how the rule would drastically curtail funding in digital belongings and why finalizing the rule in its present kind can be illegal.https://t.co/zRrPkdiWn9
— Marisa Tashman Coppel (@MTCoppel) Might 8, 2023
The identical day, a16z basic counsel Miles Jennings tweeted its letter, saying the agency “didn’t mince phrases” and known as the SEC proposal a “misguided and clear try to wage battle on crypto.”
In its letter, the Blockchain Affiliation supplied over a dozen separate arguments to rebuff the SEC. Amongst different claims, it stated the rule exceeds the SEC’s authority, would inhibit advisers from transacting with crypto exchanges and would go away buyers’ belongings at extra danger.
A16z detailed related arguments in its letter however centered extra on its results on registered funding advisers, particularly that advisors can be prevented from utilizing crypto and the principles might violate the obligation of care the SEC requires of such corporations.
On Friday, we filed a remark letter to the SEC’s safeguarding custody rule. We didn’t mince phrases.
The proposal is one other misguided and clear try to wage battle on crypto, and if handed it can end in investor hurt, market inefficiencies and poor capital formation. pic.twitter.com/Z7S01Z8SOw
— miles jennings | milesjennings.eth (@milesjennings) Might 8, 2023
It known as the prohibition in opposition to advisors having the ability to commerce crypto on centralized exchanges “unlawful, unworkable and harmful.”
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But to be accredited by the SEC, the February proposal would apply extra stringent guidelines on funding advisers within the custody of belongings, inclusive of crypto.
Corporations would want to correctly segregate belongings and custodians will probably be required to have annual audits from public accountants amongst a raft of different transparency measures.
Gensler has particularly taken intention at crypto exchanges with the rule, and stated some crypto buying and selling platforms providing custody providers should not precise “certified custodians.”
The proposal even noticed pushback from inside the SEC. Commissioner Hester Pierce questioned the rule’s “workability and breadth” and its seeming focusing on of crypto and crypto-related corporations.
Journal: Crypto regulation — Does SEC Chair Gary Gensler have the ultimate say?
