The U.S. SEC (Securities and Exchange Commission) has a new proposal that could impact the services offered by cryptocurrency firms. Under the new plan, it could be more difficult for pension funds, hedge funds, and private equity firms to partner with many cryptocurrency companies. Specifically, it will be more difficult for firms to be “qualified custodians.”
According to Bloomberg, a five-member SEC panel will decide on Feb. 15 whether the plan moves on to the next round. The remainder of the SEC will vote on the motion, given a majority (three votes out of five) is achieved. Moreover, the proposal would be changed after taking feedback, given they are accepted.
The SEC’s proposals would be the most recent action taken by Washington to reduce the dangers that cryptocurrency may provide to the larger financial system. After many notable failures in 2022, regulators have adopted a more assertive attitude. Furthermore, the SEC’s actions in the last couple of days have led to a heavy sell-off of many tokens. Recently, the SEC barred Kraken from offering staking services to retail investors.
What will cryptocurrency firms do if the SEC’s proposal is accepted?
According to Bloomberg, if the agreement is implemented, certain cryptocurrency companies may have to relocate the digital asset holdings of their clients. Moreover, the study also mentioned the possibility of “surprise audits” pertaining to these financial institutions’ custody arrangements or other implications.
Additionally, SEC chair Gary Gensler is facing a lot of criticism for the watchdog’s recent clampdowns. The SEC’s move against Kraken’s staking services sent a strong warning to other cryptocurrency firms. Furthermore, Gensler asked firms to take note of the situation and comply with the agency’s stance.
However, the SEC chair did say that cryptocurrency staking might not be completely banned. However, firms must register with the agency “because investors need that disclosure.”
Nonetheless, investors are on edge regarding how regulatory measures may unfold in the United States. The global cryptocurrency market cap fell 0.9% in the last 24 hours, currently at $1.05 trillion.