The Crypto Times
Image default
Government News

US Securities Commission and FINRA Released Statement on Crypto Compliance Issues

Commission (SEC) recently provided an outline on regulatory compliance concerns geared towards crypto custodians. 

The two organizations acknowledged in their joint announcement that they are still looking into specific circumstances wherein a cryptocurrency custodian can adhere to the Customer Protection Rule of the SEC. 

The Customer Protection Rule states that broker-dealers are required to protect customer assets and to keep said assets distinct from the company’s assets. This will increase the chances of the customer’s cash and securities being returned in case there’s a failure on the broker-dealer’s end. 

The shared report also noted that a cryptocurrency custody service might not ably demonstrate it can control the assets it allegedly holds. 

FINRA and SEC

FINRA and the SEC also discussed how keeping a private key is not enough to prove ownership of the digital currency. They said that a third party could obtain a copy of the key and conduct a transaction the custodian didn’t approve. 

What’s more, if such a thing happened, the custodian won’t be able to reverse it, even if it has hold of a private key. This generally applies to whatever transactions the custodian might want to reverse or cancel. 

Aside from custodial concerns, the report also discussed issues on enlisting noncustodial services like broker-dealer activities and over-the-counter platforms. Other compliance issues included bookkeeping rules and liquidation through the Securities Investor Protection Act. 

Regulating Crypto

The SEC had asked for feedback on how it could regulate cryptocurrency settlements back in March. It also had a scheduled broker-dealer meeting in June to discuss cryptocurrency. FINRA was also part of the discussion.

Related posts

Grayscale Investments Continues with the Private Placing of Bitcoin Trust for Investors

Viena Abdon

UPS Announces Merchant Supply Chain Blockchain

Viena Abdon

California Couple Pleads Guilty to Selling Drugs in Dark Web for Crypto

Viena Abdon

Courts in France to Revolutionize Corporate Registry With IBM Blockchain Platform

Viena Abdon

25 High Value BTC Transactions Amounting to $6 Billion Placed in One Block

Viena Abdon

Premier League Club Manchester City Announces Partnership with Blockchain Gaming Startup

Viena Abdon