Congressmen Michael Flood and Ritchie Torres wrote to SEC Chair Gary Gensler, urging him to maintain custody guidelines unchanged.
In February, the U.S. Securities and Trade Fee (SEC) proposed particular modifications to the Funding Advisors Act 1940. Presently, the definition of “certified custodians” consists of state-chartered banks, state-regulated belief firms, and Federally regulated banks and financial savings associations.
Below the proposed modifications, the SEC needs to restrict the definition to incorporate solely banks and financial savings associations beneath Federal regulation.
Congressmen Flood and Torres wrote to Chair Gensler on Might 18, urging him to maintain the present definition unchanged.
They argued that custody of property for a Registered Funding Advisor (RIA) is a “core banking exercise.” Due to this fact, such exercise must be topic to the banking guidelines and rules beneath the present dual-banking system within the U.S. – with state and nationwide banks working equivalently.
The Congressmen additionally identified that state regulators have already got guidelines in place to guard customers. Uninsured state belief firms stay topic to complete buyer safety guidelines, like capital and liquidity requirements, and have “prudently supplied custody providers for hundreds of years.”
Due to this fact, narrowing the definition of certified custodians “will do the alternative” of offering extra safety for traders, the Congressmen wrote. They added that given the small variety of digital asset custodians, limiting the definition will seemingly trigger market focus and adversely influence competitors.
Lastly, it was identified that the SEC’s personal draft famous {that a} narrowing of the definition may trigger traders to take away property from an revolutionary and secure custodian – doubtlessly leading to property positioned at a “higher danger of loss.”
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