Jamie McNeill
In light of FTX, and a series of other high profile collapses in the crypto space in 2022, the SEC has been calling for tighter custody rules in the cryptocurrency space in order to protect investors from malevolent or negligent actors. As the most important financial regulator in the US, these steps are extremely significant.
SEC is making it harder for firms to custody crypto
Jesse Powell, the CEO of Kraken, has lamented that the SEC’s drive to regulate the industry’s custodians is making it harder for retail users with less understanding of the space to adequately capitalise on the industry, since the barriers to participating are rising with more regulation.
Step 1: Require registration to custody crypto
Step 2: don't let anyone register
Step 3: https://t.co/IuTXo9usYT— Jesse Powell (@jespow) February 15, 2023
Kraken was recently forced to pay a settlement of $30 to the SEC thanks to their offering of staking ETH, although they are determined to fight the case legally.
Large institutions welcome the regulation
Other institutions are welcoming the regulation, since they believe that the enhanced degrees of regulatory clarity mean that companies will be able to more effectively meet the demands of their clientele without compromising their legal responsibilities.
For example, Mike Novogratz of Galaxy Digital and Kevin O’Leary, a spokesperson for FTX, have both highlighted the fact that institutions are likely to be far more open to the prospect of investing in digital assets if there are clearer regulations.
Evidence of this can be seen in El Salvador, which has developed one of the most comprehensive frameworks on the planet for investing in digital currencies: bitcoin is recognised as a commodity, whilst all other crypto assets come under the framework of securities.
El Salvador has seen some of the fastest growth of any nation in the world over the past few years, and this largely credited to their positive policies towards bitcoin and their clear regulations for other assets.
Relevant news:
- SEC Draft Will Make it Harder for Crypto Firms to be “Qualified Custodians” in New Blow to the Crypto Industry
- Our Cryptocurrency Guides
- How to Buy Bitcoin – Beginners’ Guide
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This article was written for Business 2 Community by Jamie McNeill.
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