The U.S. SEC was probing registered investment advisors over whether they were compliant with crypto rules. The investigation was accelerated following FTX’s collapse. The United States Securities and Exchange Commission (SEC) was reportedly probing registered investment advisors operating in traditional finance over their compliance with the rules surrounding custody of client crypto assets. Custody of […]
The U.S. SEC was probing registered investment advisors over whether they were compliant with crypto rules.The United States Securities and Exchange Commission was reportedly probing registered investment advisors operating in traditional finance over their compliance with the rules surrounding custody of client crypto assets.on 27 January, the investigation by the SEC would determine if investment advisors were offering digital asset custody to their clients without proper qualifications.
According to the sources, who have “knowledge of the inquiry,” the SEC’s investigation was ongoing for several months. However, it was accelerated following the collapse of Bahamas-based crypto exchange. The regulator’s investigation had not been made public as the agency’s inquiries were not revealed.
As per the SEC, public companies must inform investors if they have a stake in the industry’s recent crypto contagion. The regulator asked companies to come forth if they faced risks to their businesses, “Due to excessive redemptions, withdrawals or a suspension of redemptions or withdrawals of crypto assets.”By law, investment advisory firms must be “qualified” to offer custody services to clients. In addition, they must comply with custodial safeguards set out in the Investment Advisers Act of 1940.“This is an obvious compliance issue for investment advisers. If you have custody of client assets that are securities, then you need to custody those with one of these qualified custodians.
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