{"id":18396,"date":"2023-01-26T22:01:54","date_gmt":"2023-01-27T06:01:54","guid":{"rendered":"https:\/\/coinnetworknews.com\/us-securities-regulator-probes-wall-street-over-crypto-custody-report\/"},"modified":"2023-01-26T22:01:54","modified_gmt":"2023-01-27T06:01:54","slug":"us-securities-regulator-probes-wall-street-over-crypto-custody-report","status":"publish","type":"post","link":"https:\/\/coinnetworknews.com\/us-securities-regulator-probes-wall-street-over-crypto-custody-report\/","title":{"rendered":"US securities regulator probes Wall Street over crypto custody: Report"},"content":{"rendered":"
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The United States Securities and Exchange Commission (SEC) has been probing traditional Wall Street investment advisors that may be offering digital asset custody to its clients without the proper qualifications.<\/p>\n

A Jan. 26 Reuters report citing<\/a> \u201cthree sources with knowledge of the inquiry\u201d said the SEC\u2019s investigation has been going on for several months already but accelerated after the collapse of crypto exchange FTX.<\/p>\n

The investigations by the SEC have not been known previously before as the agency\u2019s inquiries are not public, said the sources. <\/p>\n

As per the Reuters report, much of the SEC\u2019s efforts in this inquiry are looking into whether registered investment advisors have met the rules and regulations around the custody of client crypto assets. <\/p>\n

By law, investment advisory firms must be \u201cqualified\u201d to offer custody services to clients in addition to complying with custodial safeguards set out in the Investment Advisers Act of 1940.<\/p>\n

Cointelegraph reached out to the SEC to seek clarity on the matter but did not receive an immediate response.<\/p>\n

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If adopted, our best ex rule would help ensure that brokers have policies & procedures in place to uphold one of their most important obligations: to seek best execution when trading securities, whether equities, fixed income, options, crypto security tokens, or other securities. pic.twitter.com\/gZdIEcNbVY<\/a><\/p>\n

\u2014 Gary Gensler (@GaryGensler) January 24, 2023<\/a><\/p><\/blockquote>\n

The recent revelation suggests the SEC hasn\u2019t turned a blind eye to traditional investment firms in the digital asset space, Anthony Tu-Sekine said, who leads Seward and Kissel’s Blockchain and Cryptocurrency Group in a note to Reuters:<\/p>\n

\u201cThis is an obvious compliance issue for investment advisers. If you have custody of client assets that are securities, then you need to custody those with one of these qualified custodians.\u201d<\/p><\/blockquote>\n

“I think it’s an easy call for the SEC to make,\u201d he added.<\/p>\n

Related: <\/em><\/strong>Senator Warren proposes reducing Wall Street\u2019s involvement in crypto<\/em><\/strong><\/a><\/p>\n

On Nov. 15, the Wall Street Blockchain Alliance (WSBA) wrote<\/a> a letter to the SEC to seek clarity on what potential amendments, if any, apply to the \u201cCustody Rule\u201d as it pertains to digital assets.<\/p>\n

A letter written to the SEC by six members of the WSBA seeking regulatory clarity over digital asset custodial rules. Source: <\/em>SEC.<\/em><\/a><\/figcaption><\/figure>\n

Cointelegraph has reached out to the WSBA to ascertain whether they have received a response from the SEC.<\/p>\n

Meanwhile, the securities regulator has continued to beef up its crypto enforcement efforts over the year. In May 2022, it increased its \u201cCrypto Assets and Cyber Unit\u201d team by nearly 100%<\/a>.<\/p>\n

It\u2019s also kept busy dealing with the ongoing lawsuit against Ripple Labs, actions relating to FTX\u2019s collapse<\/a> and its founder Sam Bankman-Fried<\/a>, among many more. <\/p>\n