• Coinbase’s Paul Grewal voiced his opinion on the proposed SEC custody rule, suggesting a more inclusive approach and unified possession or control standard for crypto assets.
• The proposed SEC custody rule would require registered investment advisers (RIAs) to hold client assets at qualified custodians.
• Marisa Tashman Coppel from the Blockchain Association warned that the proposed rule change could “drastically curtail” crypto investments.
SEC Proposes Custody Rule Change
The U.S. Securities and Exchange Commission (SEC) has recently proposed revisions to federal custody requirements that would require registered investment advisers (RIAs) to hold client assets at qualified custodians. This proposal has been met with both praise and criticism from those in the cryptocurrency industry, who have voiced their opinions on what they think it would mean for digital asset investors and institutions alike.
Coinbase Chief Legal Officer Critiques SEC Proposal
Coinbase Chief Legal Officer Paul Grewal spoke up against the proposal, saying in a Twitter thread that while he agrees with its “spirit”, he believes it unnecessarily singles out cryptocurrencies by requiring them to be held in a qualified custodian and not allowing other forms of possession or control standards for these assets. He also suggested a more inclusive approach when considering qualified custodians and unified possession or control standard for all digital assets across all jurisdictions within the United States.
Marisa Tashman Coppel Warns of Crypto Investment Constraints
Marisa Tashman Coppel, Policy Counsel for the Blockchain Association, also warned on May 8 that if adopted as is, this proposal could “drastically curtail” crypto investments as it would limit options for RIAs looking to invest in them due to lack of access to qualified custodial services. She noted that this could have an adverse effect on institutional investments into digital assets as well as retail investors who may miss out on potential gains due to constraints placed upon them by this regulation.
Deadline For Submissions Passes
The deadline for submissions regarding this proposed rule passed on May 8th 2021 – Coinbase officially added its comments regarding the proposed rule before then – so we will have to wait until further notice from the SEC before seeing how exactly this new regulation will affect digital asset investing in the United States going forward.
Conclusion
The cryptocurrency industry has had mixed reactions towards the SEC’s recent proposal which seeks to tighten regulation around RIAs holding client assets at qualified custodians – specifically concerning digital asset investments – but ultimately we will not know which direction they decide to take until further notice is given by them on this matter.
