Gary Gensler shared his opinion on the current existing custody rules and noted that crypto exchanges are not qualified as crypto custody service providers.
Gary Gensler is Chairman of the United States Securities and Exchange Commission (SEC) agency. The SEC agency is the dominant regulatory body in the US crypto sector. After the downfall of the FTX like big Crypto companies, this regulatory body showed a strict stance over the old rules & systems in the Crypto sector.
On 2 March, Speaking before the Investor Advisory Committee, Gary noted that current crypto custody rules are not suitable & enough to protect the crypto investors’ fund.
The SEC chairman said that existing traditional crypto fund & securities custody rules are supposed to safeguard crypto investors’ assets but the majority of the crypto exchanges, fulfilling those rules to provide crypto custody services, are not qualified as custodians.
According to Gary, crypto Investors need to understand how these crypto companies are operating their business, and on behalf of their financial activities, we should judge whether they are qualified custodians or not.
“Based upon how crypto trading and lending platforms generally operate, investment advisers cannot rely on them today as qualified custodians,” Gary said.
However, Gary didn’t mention the name of any particular crypto company or exchange but noted that over the last few months, many crypto exchanges failed & left the customers hung out to dry at bankruptcy court.
Gary suggested focusing on the crypto custody rules and also ensuring that only well-qualified crypto custodians are holding crypto Investors’ funds.
Media reports confirmed that we should not take these statements by the SEC chairman as a new policy or new decision by the SEC agency and these are only personal opinions of the SEC Chairman, which are focused on the Investors’ fund safety & prohibit the situations like FTX exchange fraud.