SEC Floats Framework for Holding Crypto Assets

By Dean SealThe Securities and Exchange Commission has laid out a new set of rules for how investment firms and advisers manage their clients' cryptocurrency.The agency on Thursday issued a proposal to create custody rules for digital assets and establish who can serve as crypto custodians. The new rules would also clarify recordkeeping and auditing requirements for crypto and make it easier for advisers to provide crypto-related investment advice.The proposal marks the SEC's latest effort to fill the regulatory void around crypto after the Clarity Act, industry-friendly legislation that aimed to build a regulatory framework for crypto, failed to make it out of the Senate last month.The SEC has championed cryptocurrency during the second term of President Trump, who has extensive ties to the industry and made billions of dollars from crypto last year.SEC Chairman Paul Atkins said the proposal was a step toward making the U.S. the "crypto capital of the world.""These efforts acknowledge that blockchain technology holds the potential to modernize the financial system, and that onchain markets should not be relegated offshore or forced into ill-fitting regulatory models," Atkins said.The public has 60 days to submit feedback before the SEC decides on finalizing the rule.The proposal comes a day before the exit of Commissioner Hester Peirce, who has been an outspoken advocate for crypto and digital assets in her eight years at the agency. Her departure leaves the five-seat commission with just two members, who are both Republicans. The White House hasn't nominated candidates for the SEC's two vacant Democratic seats.Write to Dean Seal at [email protected]