US SEC and FINRA Issue Statement on Crypto Custody Issues
By Max Boddy The United States Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) outlined regulatory compliance issues for cryptocurrency custodians in an announcement on July 8. According to the joint statement, the organizations have yet to discover a set of circumstances in which a crypto custodian could comply with the SEC’s Customer Protection Rule, which is described as follows: “Put simply, the Customer Protection Rule requires broker-dealers to safeguard customer assets and to keep customer assets separate from the firm’s assets, thus increasing the likelihood that customers’ securities and cash can be returned to them in the event of the broker-dealer’s failure.” The report further claims that a crypto custody service may not be able to sufficiently demonstrate that it actually controls the assets it purports to hold. The SEC and FINRA discuss how simply holding a private key, for instance, is not sufficient to demons...