• The US Securities and Exchange Commission (SEC) is proposing new regulations this week that could affect the services crypto firms offer their clients.
• The five-member SEC panel will vote on the proposal on Feb. 15 and if approved, the proposal must be voted officially by the rest of the SEC.
• If the new rule is implemented, hedge funds, private equity firms, and pension funds would have to move their clients‘ holdings elsewhere.

SEC to Vote on New Rule for Crypto Firms

The US Securities and Exchange Commission (SEC) is planning to propose a new rule this week that could affect how crypto firms operate as qualified custodians. A five-member SEC panel will vote on the proposal on February 15th that could make it difficult for these companies to hold digital assets for their clients. If approved, it must then be voted on officially by all members of the SEC before being implemented.

Who Could Be Affected?

This proposed change could make it tougher for hedge funds, private equity firms, and pension funds who use crypto firms to hold their clients‘ assets. It would mean they would have to find alternative means of storing them instead of relying on crypto companies.

Previous Attempts at Regulation

In 2020, an SEC staff said that they were looking into who could become a qualified custodian of crypto assets and asked for feedback from the public before making any official decisions. This latest attempt at regulation aligns with its plans to reduce risks associated with cryptocurrency in order to protect the broader financial system from failure or abuse.

Official Voting Process

If it passes through approval from the five-member panel, then it will be put out for public comment before being finalized by another vote from all members of the SEC. This process has been scheduled for February 14th 2023 at 9:55 am EST so interested parties can submit feedback or questions concerning its implementation until then.

Consequences

If passed into law this rule could have significant consequences on how crypto companies do business as well as those who use them as custodians for their digital asset holdings or trades in general