Investor Advisory Board Speaks Before SEC Chairman Gary Gensler Current custody regulations do not adequately protect users’ crypto assets.
Gensler said existing custody regulations are supposed to protect investors’ crypto funds and securities by qualified custodians. However, in his view, the cryptocurrency exchanges currently in that role are not qualified administrators.
“Given how cryptocurrency trading and lending platforms generally operate, investment advisors cannot currently rely on them as qualified custodians.”
Without citing specific examples, Gensler noted a spate of exchange failures in recent times where users have been hanging out to toast in bankruptcy court.
He recommended protection rules that allow for “significant enhancements” that allow only qualified custodians to hold users’ crypto assets.
Gensler’s remarks are merely his views, do not represent SEC policy, and may not reflect the views of the agency’s staff.