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The U.S. Securities and Exchange Commission has submitted to the White House Office of Management and Budget a new proposed rule revising its cryptocurrency custody regulations for investment advisers and investment companies.
On Aug. 27, local time, blockchain outlet CoinPost reported that the proposal focuses on removing parts of the existing custody rules while setting clearer standards for holding crypto assets.
The SEC submitted the proposal dated Aug. 25. The details are expected to be disclosed after OMB review is completed. The commission, made up of three Republican commissioners, is then expected to put the agenda item to a vote, conduct a public comment process lasting more than 60 days and finalise the rule.
The main aim of the overhaul is to clarify in institutional terms how investment advisers and investment companies should custody clients’ cryptocurrencies without violating SEC rules. The SEC explained that parts of the current rules have become outdated as market, trading and holding practices have changed. It formalised the view that the existing framework does not sufficiently reflect recent crypto custody practices.
The push for the proposal followed industry inquiries. Investment advisers and investment companies have asked regulators how they can hold clients’ cryptocurrencies without breaching SEC rules. The SEC appears to be seeking to codify custody standards through the new proposal.
The SEC views the proposal as part of a broader effort to modernise the regulatory framework led by SEC Chairman Paul Atkins (폴 앳킨스). The SEC said it is pursuing regulatory modernisation and noted that some of the current custody rules no longer fit a changed market. While the detailed provisions have not been disclosed, the proposal is likely to directly affect registered investment companies that handle cryptocurrencies.
Separately, the SEC released on Aug. 18 another proposed rule, “Regulation Cryptoasset”, to re-examine the regulatory environment for cryptocurrency-related fundraising. The proposal would create new exemptions from registration requirements under the Securities Act of 1933. Key elements include a “startup exemption” allowing fundraising of up to $5 million over four years and a “fundraising exemption” allowing up to $75 million every 12 months.
Against this backdrop, the SEC’s recent moves place more weight on first addressing areas where practical conflicts are frequent, such as custody and fundraising, rather than uniformly tightening the regulatory structure across the broader crypto market. With the custody proposal directly tied to the legality of holding client assets, the next focus is expected to be the specific language released after OMB review and what changes are made during the public comment process.
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Yoonseo Leeyslee@d-today.co.kr
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Source: www.digitaltoday.co.kr