The Biden administration is pushing for legislation to segregate client funds from those on cryptocurrency exchanges and ensure they are safe in the event of an exchange failure, according to people familiar with the matter, potentially limiting how the industry can operate.
This type of custody rule is standard for financial institutions such as futures firms, but cryptocurrency exchanges often mix their funds with assets held by customers, and the government wants legislation to end that.
It has been revealed that federal officials will push the rule into any related crypto bills considered by Congress in the coming weeks, building on an argument in last year’s Financial Markets Working Group report on stablecoins that companies hosting cryptocurrency wallets need to Close monitoring by the federal government.
