US Congressmen urge SEC to keep definition of ‘qualified custodian’ unchanged
Congressmen Michael Flood and Ritchie Torres wrote to SEC Chair Gary Gensler, urging him to maintain custody guidelines unchanged.
In February, the U.S. Securities and Alternate Fee (SEC) proposed particular adjustments to the Funding Advisors Act 1940. At present, the definition of “certified custodians” contains state-chartered banks, state-regulated belief corporations, and Federally regulated banks and financial savings associations.
Below the proposed adjustments, the SEC desires to restrict the definition to incorporate solely banks and financial savings associations underneath Federal regulation.
Congressmen Flood and Torres wrote to Chair Gensler on Might 18, urging him to maintain the present definition unchanged.
They argued that custody of property for a Registered Funding Advisor (RIA) is a “core banking exercise.” Due to this fact, such exercise ought to be topic to the banking guidelines and laws underneath the prevailing dual-banking system within the U.S. – with state and nationwide banks working equivalently.
The Congressmen additionally identified that state regulators have already got guidelines in place to guard shoppers. Uninsured state belief corporations stay topic to complete buyer safety guidelines, like capital and liquidity requirements, and have “prudently supplied custody providers for hundreds of years.”
Due to this fact, narrowing the definition of certified custodians “will do the other” of offering extra safety for traders, the Congressmen wrote. They added that given the small variety of digital asset custodians, limiting the definition will probably trigger market focus and adversely influence competitors.
Lastly, it was identified that the SEC’s personal draft famous {that a} narrowing of the definition would possibly trigger traders to take away property from an revolutionary and secure custodian – probably leading to property positioned at a “larger danger of loss.”
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