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The U.S. Securities and Exchange Commission (SEC) is investigating traditional Wall Street investment managers who may be offering custody of digital assets to their clients without proper entitlement.
A Reuters report on January 26, citing “three sources with knowledge of the investigation,” said the SEC investigation had already been going on for months but accelerated after the collapse of crypto exchange FTX. said he did.
The investigation by the SEC was previously unknown because the agency’s investigation has not been made public, the sources said.
According to a Reuters report, many of the SEC’s efforts in the investigation are investigating whether registered investment advisors are meeting rules and regulations regarding the custody of their clients’ crypto assets.
By law, investment advisors must be “entitled” to provide custody services to their clients in addition to complying with the custody protections set out in the Investment Advisers Act of 1940.
Cointelegraph reached out to the SEC for clarification on this matter, but did not receive an immediate response.
If adopted, our best ex rules are of the utmost importance to seek the best execution when trading securities, whether they are stocks, bonds, options, crypto security tokens, or other securities. It helps ensure that brokers have policies and procedures to maintain one of their obligations. . pic.twitter.com/gZdIEcNbVY
— Gary Gensler (@GaryGensler) January 24, 2023
Recent revelations suggest the SEC is not turning a blind eye to traditional investment firms in the digital asset space, Anthony Tu-Sekine, who heads Seward and Kissel’s Blockchain and Cryptocurrency Group, said in a memo to Reuters. said in
“This is a clear compliance issue for investment advisors. If you have client assets that are securities in custody, you should keep them in one of these qualified custodians.”
“I think it would be easy for the SEC to do,” he added.
Related: Senator Warren Proposes Less Wall Street Involvement in Cryptocurrencies
On November 15th, the Wall Street Blockchain Alliance (WSBA) sent a letter to the SEC asking for clarification on possible amendments to “custody rules” related to digital assets.
Cointelegraph has reached out to the WSBA to confirm if it has received a response from the SEC.
Meanwhile, securities regulators have continued to crack down on cryptocurrencies over the past year. By May 2022, we have increased our “Crypto Assets and Cyber Unit” team by almost 100%.
I’ve also been busy handling ongoing lawsuits against Ripple Labs, and lawsuits related to the demise of FTX and its founder, Sam Bankman-Fried.
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