The Blockchain Association, a prominent industry group in the crypto space, filed a comment letter on May 8 in response to proposed regulations from the U.S. Securities and Exchange Commission (SEC).
The letter states that the proposed rule, if passed, would reduce rather than increase protections for advisory clients by preventing local custodians of digital assets from continuing to provide services.
In February, the SEC proposed changes to its regulatory rules to expand the scope of the rules beyond client money or securities and extend them to cover client assets under investment advisors.
The Blockchain Association believes that the current rules need to be revised to “fully take into account” the characteristics of digital assets. The group recommends that the SEC allow advisors to use trading platforms associated with qualified custodians and subject to an appropriate level of regulatory control.
The proposed regulatory changes have sparked concerns in the industry that the requirements are overly onerous and could exclude digital asset custodians who are best equipped to provide these services.
The Blockchain Association believes that the SEC’s requirements are misleading and will adversely affect the industry’s ability to provide clients with best-in-class custody solutions.
The Blockchain Association’s letter stated that “the proposed rule could effectively eliminate the ability of consulting clients to access digital assets held in their non-custodial wallets, reduce competition among custodians, and inhibit further development of innovative custody solutions for digital assets.” develop.”
The group called on the SEC to amend the proposed rule to allow investment advisers the option to use a qualified custodian for custody of digital assets, regardless of whether the custodian meets the definition of a qualified custodian under the Investment Advisers Act.
The association also noted that the current regulatory framework poses significant challenges to the development and growth of the digital asset industry. The regulatory environment leads to a lack of clarity and consistency, which in turn creates uncertainty and stifles innovation.
The Blockchain Association believes that any regulatory rules must be carefully crafted to foster innovation and growth in the digital asset space while protecting investors.