The crypto space is apprehensive due to the recent enforcement actions by U.S. regulators on some firms. One of the latest reports is about Paxos Trust company, the issuer of Binance USD stablecoin.
The United States Securities and Exchange Commission (SEC) revealed its plans to sue the blockchain firm. Also, the New York Department of Financial Services (NYDFS) ordered Paxos to stop issuing BUSD tokens.
In a new development, the SEC now targets crypto companies, even those with operational licenses. The regulator is working on a new proposal this week to determine the type of products and services digital assets firms will offer.
SEC Panel To Vote On Rule Change On Crypto Firms’ Custody Services
Recently, Bloomberg reported that the SEC plans to vote on a new proposal that will impact the operations of all crypto-related firms licensed as custodians. The rule could make it hard for crypto companies to hold digital assets on behalf of their clients.
As per the report, the regulator is set to vote on Wednesday, February 15, on rule changes regarding digital asset firms’ services. After that, a 5-member SEC panel will initiate the voting process to determine the next phase for the proposal.
The voting process requires a majority of the panel, which is 3 out of 5, to vote in favor of the proposal. Then, other members of the SEC will officially complete the process by reviewing the proposal. Once approved, the proposal will be amended with all the necessary feedback reported as well.
If the commission implements the new rule, it will impact heavily on the major clients of custodians, including private equity firms, pension funds, hedge funds, and others.
Over the past few years, the SEC discussed some requirements for a crypto firm to qualify as a digital custodian. However, no one could tell the possible changes the regulator proposes.
In its report, Bloomberg noted that some crypto companies might seek alternative places to move their clients’ digital asset holdings. Also, the regulator could conduct some impromptu audits on the financial firms regarding their custodial relationships at any time.
SEC Increases Attention On Crypto Firms
Following the FTX crypto exchange’s sudden bankruptcy, the SEC focused more on digital assets and Environmental, Social, and Governance (ESG) funds. The regulator has earlier warned firms issuing securities to reveal the risk of exposure in the crypto market to investors.
According to a CNBC report last week, the U.S. regulator is committed to following its annual list released on Tuesday, February 7. The list comprises a road map for its operations and also indicates the landscape changes and some of the risks within the securities market.
On February 8, SEC Chair Gary Gensler tweeted about releasing the agency’s examination priorities for 2023. The 2023 priorities cover several areas, including RIAs to private funds, emerging technology, crypto assets, new investment adviser and investment company rules, and others.
Featured image from Pixabay, chart from TradingView.com
Source: https://bitcoinist.com/sec-to-propose-new-rules-for-crypto-firms/