US securities regulator probes Wall Street over crypto custody: Report

The United States Securities and Exchange Commission (SEC) has been probing accepted Wall Street concern advisors that whitethorn beryllium offering integer plus custody to its clients without the due qualifications.

A Jan. 26 Reuters study citing “three sources with cognition of the inquiry” said the SEC’s probe has been going connected for respective months already but accelerated aft the illness of crypto speech FTX.

The investigations by the SEC person not been known antecedently earlier arsenic the agency’s inquiries are not public, said the sources.

As per the Reuters report, overmuch of the SEC’s efforts successful this enquiry are looking into whether registered concern advisors person met the rules and regulations astir the custody of lawsuit crypto assets.

By law, concern advisory firms indispensable beryllium “qualified” to connection custody services to clients successful summation to complying with custodial safeguards acceptable retired successful the Investment Advisers Act of 1940.

Cointelegraph reached retired to the SEC to question clarity connected the substance but did not person an contiguous response.

If adopted, our champion ex regularisation would assistance guarantee that brokers person policies & procedures successful spot to uphold 1 of their astir important obligations: to question champion execution erstwhile trading securities, whether equities, fixed income, options, crypto information tokens, oregon different securities. pic.twitter.com/gZdIEcNbVY

— Gary Gensler (@GaryGensler) January 24, 2023

The caller revelation suggests the SEC hasn’t turned a unsighted oculus to accepted concern firms successful the integer plus space, Anthony Tu-Sekine said, who leads Seward and Kissel's Blockchain and Cryptocurrency Group successful a enactment to Reuters:

“This is an evident compliance contented for concern advisers. If you person custody of lawsuit assets that are securities, past you request to custody those with 1 of these qualified custodians.”

"I deliberation it's an casual telephone for the SEC to make,” helium added.

Related: Senator Warren proposes reducing Wall Street’s engagement successful crypto

On Nov. 15, the Wall Street Blockchain Alliance (WSBA) wrote a missive to the SEC to question clarity connected what imaginable amendments, if any, use to the “Custody Rule” arsenic it pertains to integer assets.

A missive written to the SEC by six members of the WSBA seeking regulatory clarity implicit integer plus custodial rules. Source: SEC.

Cointelegraph has reached retired to the WSBA to ascertain whether they person received a effect from the SEC.

Meanwhile, the securities regulator has continued to beef up its crypto enforcement efforts implicit the year. In May 2022, it accrued its “Crypto Assets and Cyber Unit” team by astir 100%.

It’s besides kept engaged dealing with the ongoing suit against Ripple Labs, actions relating to FTX’s collapse and its laminitis Sam Bankman-Fried, among galore more.