- Crypto community sparks debates among crypto proponents, after SEC Chairman Gary Gensler made shocking comments.
- Gary Gensler points to a proposed rule and explains why he believes that Cryptocurrency exchanges are not qualified custodians.
The U.S. Exchange and Securities Commission has sparked new debates in the cryptocurrency community, among key players in the market, after Gary Gensler, the Chairman of the SEC made some important comments concerning cryptocurrency exchanges in the country.
According to Gary Gensler, cryptocurrency exchanges existing in the United States are not safe and qualified custodians for investment advisers.
He made the comment on Thursday, at the Investor Advisory Committee meeting. Gensler had made similar comments in the past and seems to be going the extra mile to reiterate his stance.
His comments are backing a proposed rule that demands that investment advisors find qualified custodians for the safeguarding of their assets. The assets also include digital currencies like Bitcoin and Ethereum. He remarked:
Based upon how crypto trading and lending platforms generally operate, investment advisers cannot rely on them today as qualified custodians. To be clear: Just because a crypto trading platform claims to be a qualified custodian doesn’t mean that it is.
Speaking on the proposal, he explains that it aligns with the rules put in place by Congress to expand custody rule as the economy witnessed many financial crises. The custody prioritizes investors’ assets above all else, he stated.
The proposal takes up Congress’s 2010 provision for us to expand the custody rule to cover all of an investor’s assets, not just their funds or securities. Congress granted us new authorities to expand the custody rule in response to the financial crisis and Bernie Madoff’s frauds. The expanded custody rule would help ensure that advisers don’t inappropriately use, abuse, or lose investors’ assets.
Key proponents still weary of possible crypto staking ban
The market had been anticipating a move from the SEC since February after rumors started circulating that the U.S. SEC was actively making plans to ban cryptocurrency staking for retail customers in the United States.
While Cardano’s Charles Hoskinson seems to back the SEC, highlighting that Ethereum staking, in particular, was harmful to the entire cryptocurrency industry, the CEO of the leading cryptocurrency Coinbase seemed to have a different view.
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Coinbase’s Brain Armstrong maintained that staking cryptocurrencies in the United States is still beneficial to customers looking to access digital assets in a different way, adding that the SEC would be making a horrible decision if it went ahead to ban crypto staking.
The SEC Chairman also previously demanded that Kraken’s staking program is offered and sold as a security. He maintains that providers who offer staking-as-a-service must register their services, and be extremely transparent in their disclosure and investor protection.
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