Coinbase and other crypto custody providers asserted on Feb. 15 that they will be able to operate under proposed changes to custodial rules.
Coinbase endorses SEC’s efforts
Today, the U.S. SEC voted to propose a regulatory change that could require exchanges to store user assets with qualified custodians. This would also update rules for custodians, possibly making it difficult for existing crypto companies to offer custody services.
Coinbase chief legal officer Paul Grewal stated on Twitter that his company is “confident” that it will remain a qualified custodian under the proposed rule change. He added that Coinbase endorses the U.S. Securities and Exchange Commission’s efforts to provide investor protections and supports the public rulemaking process.
In a Bloomberg interview, Grewal said: “we see SEC officials recognize that specifically, Coinbase is operating in a qualified manner.” However, he did not state what sort of acknowledgment this amounts to on the part of the regulator.
In a separate interview with CNBC, Grewal was asked what Coinbase would do if U.S. regulators forced the company to shut down its custody services. Grewal answered that Coinbase has “a very diversified business” in services and countries served, implying that the company could shift its focus elsewhere.
Other companies comment on proposal
Coinbase’s stance on the matter is notable as it is likely the largest crypto custody provider. It has $90 billion of assets under custody, based on numbers from BlockData.
Only a few other crypto custody providers have made statements on the matter. BitGo — the next largest provider, with $64 billion of assets under custody — similarly reassured its clients that it will remain a qualified custodian via Twitter.
Anchorage Digital, in a statement to Coindesk today, also said that it is “unequivocally” a qualified custodian and stated that it should be able to operate under the proposed rules.
Despite apparent support from custody providers, the proposed regulatory change would raise requirements for companies that wish to provide custody. The Blockchain Association has gone as far as to say that the proposed change is “bad policy” that could “restrict or prohibit” investors from engaging with the crypto industry.
The proposed change would affect investment advisors and crypto firms, and the SEC will accept comments from all concerned parties in the coming months. As such, there will certainly be more discussion before any changes are made.