Jamie McNeill
Gary Gensler has once again reiterated that investment advisors ought to be highly cautious when advocating a position in crypto as there are various rules and regulations to comply with.
In particular, he has stated that crypto exchanges can be a liability as – despite what some of them may claim in terms of being qualified custodians – they are not.
What makes a qualified custodian?
Some analysts have shot back at Gensler over this, given that the SEC has not given any guidelines whatsoever as to how an exchange can become a qualified custodian.
Many industry participants lament that Gensler is pushing people away from exchanges without highlighting a path to becoming compliant.
“Based upon how crypto trading and lending platforms generally operate, investment advisers cannot rely on them today as qualified custodians.”
Gary Gensler.
Not just anyone can be a qualified custodian for crypto.
Qualifications Include:
Manipulate the metals market.
Withhold Epstein bank documents.
Have cargo ships loaded with cocaine.
Pay hundreds of millions in fines for banking violations.
Fund Mount Gox & ETHGATE. pic.twitter.com/Hj129cud9s
— TheCryptoMemeGuy (@xrpmemeguy) March 3, 2023
How Should One Custody Their Crypto?
When one chooses to invest in crypto, there are many different options for storage.
The old mantra in the Bitcoin community is “not your keys, not your coins“, and this highlights the fact that unless you have self-custody of your assets you have to trust a third party to be responsible with your funds.
For large institutions and governments, third-party custodians with multi-sig may be the best option rather than having a sole leader memorize the nation’s private seed phrase.
However, for individuals self custody is undoubtedly the preferable option since it protects them from anything that could go wrong in other sectors.
As shown by FTX, Celsius, Cryptopia, Mt Gox, and many other meltdowns, investors can lose all of their Bitcoin if they trust third parties.
Relevant news:
- Will Crypto Regulatory Crackdown Turn the US Into a Web3 Failure or Cement its Domination?
- US Regulator Clamps Down: SEC Demands Tighter Custody Rules for Cryptocurrency
- Canadian Crypto Firms Face 30 Day Countdown to Meet Regulator Demands
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This article was written for Business 2 Community by Jamie McNeill.
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