One of the biggest cryptocurrency exchanges in the world, Coinbase, has replied to the Securities and Exchange Commission’s (SEC) most recent proposal regarding custody of cryptocurrencies.
Paul Grewal, the company’s chief legal officer, asserts that, notwithstanding the SEC’s most recent action, Coinbase Custody Trust is currently a qualified custodian and will continue to be one tomorrow.
Grewal said that the suggestion was only the start of what seemed to be a protracted process. “This is not a final action — it’s just the first step in a long process that requires the SEC to collect public views before considering next steps,” he wrote.
The top legal officer praised the SEC for adhering to the correct procedures for public rulemaking but emphasized that the proposal is just that—a proposal.
New regulations have been put out by the agency in charge of overseeing Wall Street to improve the security of consumer assets, including alternative assets like art and cryptocurrencies. Investment advisers are advised by the SEC to use licensed custodians to secure all client funds.
This comes following the high-profile failure of several cryptocurrency businesses, which made it apparent that the security of customer cash was not as good as claimed.
All asset classes would be covered by the proposed regulations, but the topic of cryptocurrency has received the most attention. To ensure that client assets were safeguarded in the event of a qualified custodian’s failure, investment advisers would need to draft written agreements with them.
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