The Blockchain Association objects to the SEC’s proposed change to the custody rule
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The Blockchain Association said on May 8 that it objects to a change to the custody rule proposed by the US Securities and Exchange Commission (SEC).
The industry group objects to the SEC proposal
Marisa Tashman Coppel, policy advisor for the Blockchain Association, warned about it The SEC’s rule change could “drastically limit” crypto investments.
She said on behalf of the Blockchain Association:
“The proposed rule departs from the SEC’s commitment … to take an asset-neutral approach. … Instead of allowing flexibility … the proposed rule discourages custodians and advisers from offering digital asset-related services. “
Coppel explained that the proposal prevents investment advisers from engaging in self-custodianship of assets. She said the new rule could make it prohibitive to act as a qualified custodian and could prevent counselors from providing the safest custody possible.
She added that the rule change could limit certain activities such as betting and trading if these services are not operated by a central intermediary or qualified custodian.
Coppel also suggested that digital assets open up new custody models, such as the decentralized custody model called multi-party computation (MPC). That model, used by Fireblocks, may not be allowed under the proposed rules, Coppel said.
Coppel added that rules around indemnification (ie loss coverage) and asset segregation can cause difficulties for advisers. Additionally, the fact that the proposed rule applies broadly to all assets without authorization from the US Congress makes the proposal an “illegal expansion” of the SEC’s authority, Coppel concluded.
These statements are Coppel’s explanation of a longer letter published by the Blockchain Association Itself, which represents over 100 member companies.
The controversy began in February
The controversy surrounding the rule change only began on February 15, when the SEC proposed the new rule. SEC Commissioner Hester Peirce soon expressed her dissent against the proposal, citing its potential impact on crypto as a concern.
However, several leading crypto platforms including Coinbase, BitGo, Anchorage Digital and Gemini have supported the proposal. These companies indicated that they were already in compliance with the proposed rule change and would not be affected by the change.
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