1. PixelPlaygroundHome
  2. Metaverse Insights

SEC Chairman Dismisses Crypto Exchange as Safe Custodian for Investment Advisers

• Metaverse Insights • 173 views

On March 2, Gary Gensler, chairman of the United States Securities and Exchange Commission (SEC), refuted the view that Crypto Exchange could become a safe and…

SEC Chairman Dismisses Crypto Exchange as Safe Custodian for Investment Advisers

On March 2, Gary Gensler, chairman of the United States Securities and Exchange Commission (SEC), refuted the view that Crypto Exchange could become a safe and qualified custodian of investment advisers.

US SEC Chairman: Crypto Exchange is not a compliant custodian

Interpretation of the news:


The Chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, has stated that it would be inappropriate for Crypto Exchanges to function as custodians for investment advisers. He mentioned this on March 2 during a hearing held by the House Financial Services Committee. Gensler stated that Custodial services comprise a significant part of the role that brokers offer investment advisers, and the SEC does not charge broker-dealers to apply screening measures to their investor custody services. This lack of oversight, coupled with the inefficiencies of Crypto exchanges, makes them unsuitable candidates for becoming custodians in the future.

Gensler’s statements show anxiety by the SEC regarding the growing use of Crypto Exchanges as custodians for investors’ assets. A custodian service is critical for any investment portfolio as it ensures the security of the investor’s assets. But the custodian service offered by Crypto Exchanges has risen in popularity due to their digital asset’s decentralized nature, which makes it difficult for tracking by governments or financial authorities. This decentralization offers investors some degree of anonymity and freedom. However, the lacking oversight of custodianship services by crypto exchanges makes them vulnerable to fraudulent activities.

The SEC has increased its efforts to regulate digital assets exchanges and custodial services. They have created a framework that requires crypto exchanges to comply with governmental policies such as licensing, annual audits, and reports of the activities carried out by the exchanges’ board of directors. The purpose of these measures is to control the regulation of exchanges and maintain financial security and stability in the capital market.

In conclusion, the chairman of the United States Securities and Exchange Commission, Gary Gensler rejects the idea of Crypto Exchanges serving as custodians for investment advisers. He believes that they are currently unsuitable for the role due to the lack of substantial government oversight, the digital asset’s decentralized nature, and the controversies around fraudulent activities associated with the exchanges. The SEC has vowed to maintain financial security by enforcing regulatory standards for exchanges and custodial services, which will ultimately reduce fraudulent activities in the system.

This article and pictures are from the Internet and do not represent Fpips's position. If you infringe, please contact us to delete:https://www.fpips.com/4609/

It is strongly recommended that you study, review, analyze and verify the content independently, use the relevant data and content carefully, and bear all risks arising therefrom.

Like (0)
Previous 03/02/2023 15:10
Next 03/02/2023 15:23

Recommended articles