SEC Investigates Wall Street Investment Advisers for Crypto Asset Custody
• The United States Securities and Exchange Commission (SEC) has been investigating traditional Wall Street investment advisers for offering digital asset custody services to clients without proper qualifications.
• The SEC’s inquiries have been ongoing for several months but have accelerated after the collapse of the crypto exchange FTX.
• The SEC is looking into whether registered investment advisers have met the rules and regulations around the custody of client crypto assets as per the Investment Advisers Act of 1940.
The United States Securities and Exchange Commission (SEC) has been investigating traditional Wall Street investment advisers for offering digital asset custody services to clients without proper qualifications. According to a Reuters report citing „three sources with knowledge of the inquiry“, the SEC’s investigations have been ongoing for several months but have accelerated after the collapse of the crypto exchange FTX.
The SEC is looking into whether registered investment advisers have met the rules and regulations around the custody of client crypto assets as per the Investment Advisers Act of 1940. This law states that all investment advisory firms must be “qualified” to offer custody services to clients and must also comply with custodial safeguards set out in the Investment Advisers Act. The SEC has not commented on the issue, however, Gary Gensler, the current chairman of the SEC, has recently tweeted that the regulator is looking into ways to ensure that brokers have the necessary policies and procedures in place to uphold one of their most important obligations: to seek best execution when trading securities, whether equities, fixed income, options, crypto security tokens, or other securities.
The SEC is looking to ensure that registered investment advisers are following the rules and regulations for the custody of crypto assets, and that clients can trust the custodial services being offered. It is important for all investment advisers to ensure that they have the necessary qualifications and safeguards in place in order to protect their clients and ensure that the crypto assets in their custody are secure.