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 Trade Fee (SEC) proposed particular adjustments to the Funding Advisors Act 1940. Presently, the definition of “certified custodians” consists of state-chartered banks, state-regulated belief corporations, and Federally regulated banks and financial savings associations.
Underneath the proposed adjustments, the SEC needs 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 belongings for a Registered Funding Advisor (RIA) is a “core banking exercise.” Due to this fact, such exercise needs to be topic to the banking guidelines and laws underneath the present 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 customers. Uninsured state belief corporations stay topic to complete buyer safety guidelines, like capital and liquidity requirements, and have “prudently provided 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 doubtless trigger market focus and adversely impression 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 belongings from an progressive and secure custodian – probably leading to belongings positioned at a “higher threat of loss.”
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