• The U.S Securities and Exchange Commission (SEC) is reportedly planning to propose a rule change that would make it harder for crypto firms to become qualified custodians for hedge funds, pension funds, and more.
• If approved, the new rule would require institutional outfits such as hedge funds and pension funds to shift their clients‘ digital assets.
• A five-member SEC team will vote on this approval on 15 February and put it out for public comment before a final vote takes place.

New Rules For Crypto Firms

The U.S Securities and Exchange Commission (SEC) is reportedly planning to propose a rule change that would make it harder for crypto firms to become qualified custodians for hedge funds, pension funds, and more. This proposal is set to be introduced on 15 February 2021.

Tighter Eligibility Requirements

If approved, the new rule would require institutional outfits such as hedge funds and pension funds to shift their clients‘ digital assets from existing crypto firms which are currently operating as „qualified custodians“. These institutions are required by law to have qualified custodians who can provide secure storage of digital assets on behalf of their clients.

Voting Process

A five-member SEC team will vote on this approval on 15 February 2021 and put it out for public comment before a final vote takes place which will take into consideration any feedback received from the public.

Regulatory Crackdown

This is the latest in a series of enforcement actions by U.S agencies as part of a renewed crackdown campaign against crypto firms operating in the country. Earlier this month, the SEC’s Division of Examinations announced its 2023 examination priorities which included emerging technologies and crypto assets with an emphasis placed upon ensuring that these companies met standards when making recommendations or providing investment advice; along with regularly reviewing disclosure practices related to risk management .

Conclusion

The proposal put forward by the SEC could have major implications for how cryptocurrency firms interact with institutional investors such as hedge funds and pension funds if approved after due process has been followed through with votes being taken into account along with public opinion before any decisions are made regarding changes in regulations surrounding them .