US securities regulator investigates investment advisers linked to cryptocurrency sources |
New York, 26 january (Reuters) – USA The Securities and Exchange Commission is investigating registered investment advisers over whether they are complying with rules for holding client cryptocurrencies, three sources with knowledge of the inquiry told Reuters.
The SEC has been questioning advisers’ efforts to comply with the agency’s rules on custody of clients’ digital assets for months, but the probe has accelerated since the implosion of the FTX cryptocurrency exchange. They spoke on condition of anonymity because the inquiries are not open.
Advisers managing clients’ digital assets typically use a third party to store them.
According to one of the sources, the SEC execution staff asks investment advisers for details on what they have done to assess companies’ holdings for platforms including FTX. A previously unreported broad execution inspection, USAa sign that the top market regulator’s scrutiny of the cryptocurrency industry is encompassing more traditional Wall Street firms.
An SEC spokesman declined to comment.
By law, investment advisers cannot hold client funds or securities unless they meet certain requirements for asset protection. One of those requirements is that advisers hold such assets in a firm that is considered a “qualified custodian,” although the SEC does not have any specific listing or licenses for firms to be such custodians. offer doesn’t.
The SEC’s investigation suggests the regulator is targeting a long-standing problem for traditional firms looking to invest in cryptocurrency. lawyers They told Reuters. The agency’s accounting guidance has made it too capital-intensive for many lenders to hold digital assets on behalf of clients, limiting the options for advisers seeking custodians.
Anthony Tu-Sekine, Head of Blockchain and Cryptocurrency at Seward & Kissel, said, “This is clearly a compliance issue for investment advisors. If you control client assets that are securities, then you need to have one of these qualified custodians,” he said. Group.
“I think it’s an easy call for the SEC.”
Under Democratic leadership, the SEC has made cryptocurrency a priority area for enforcement, nearly doubling the size of its crypto team in the past year. But with the regulator, a series of bankruptcies in the industry and allegations of fraud against Sam Bankman-Fried, the founder and former head of FTX USA is under renewed pressure to go after the cryptocurrency after its accusations were revealed. He pleaded not guilty.
Two Bankman-Fried partners, former Alameda CEO Caroline Ellison and former FTX chief technology officer Gary Wang, both pleaded guilty to defrauding investors and agreed to cooperate.
The SEC is also investigating FTX equity investors to detail their due diligence efforts when investing in cryptocurrency.
Reporting by Chris Prentice in New York Additional reporting by Elizabeth Howcroft in London and Hannah Lang in Washington report Edited by Megan Davies and Leslie Adler
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2023-01-27 05:25:53
Source – reuters
Translation“24 HOURS”