The U.S. Securities and Exchange Commission (SEC) is concerned about the rules of digital asset custody that Wall Street investment advisers provide to their clients.
The SEC is investigating traditional Wall Street investment advisers. The regulator’s attention was drawn to the terms of custody of cryptocurrencies and other digital assets and the compliance of companies providing such services to asset protection requirements. Reuters reports about it, citing its own sources familiar with the situation.
According to the publication, the investigation has been underway for several months. It began before the collapse of FTX, but the situation with SBF’s structures prompted investigators to speed up the process. All SEC investigations are non-public, so information about the regulator’s interest in Wall Street didn’t leak into the public sphere earlier.
The investigation focuses on investment advisers’ compliance with legal regulations regarding the custody of client assets. In addition, U.S. law specifies that custody services to clients must be provided exclusively through “qualified” custodians. The problem is that the SEC has no process for licensing such companies or a specific list of them.
“This is an obvious compliance issue for investment advisers,” Anthony Tu-Sekine, Head of Blockchain and Cryptocurrency Group at law firm Seward & Kissel, commented for Reuters. He believes that the current investigation demonstrates the SEC’s intention to raise an issue that has been a long time coming, i.e., the regulation of crypto investment processes for traditional companies. Moreover, the agency is under pressure after a series of bankruptcies of cryptocurrency companies in 2022 and has to pay special attention to the crypto market.
