According to a story by Reuters that cites three unidentified individuals, the United States Securities and Exchange Commission (SEC) is reportedly conducting an investigation into registered investment advisors to see whether or not they are adhering to guidelines regarding the custody of client cryptocurrency holdings.
The investigation has been going on for months
The attempts of these advisors to comply with the rule imposed by the United States regulatory body governing the custody of cryptocurrency assets have come under scrutiny.
Even though the inquiry has been going on for a number of months, its scope has broadened as a result of the failure of FTX.
As a direct result of this, SEC enforcement personnel have been putting pressure on investment advisors to provide information regarding the custody evaluations they have conducted for platforms such as FTX.
The efforts of equity investors to do their due diligence on the cryptocurrency exchange have also been targeted by the regulator.
Investment advisors are required to fulfill a number of stringent safety requirements before the law would let them take custody of their customers’ cryptocurrency holdings.
One of the criteria is that they are regarded as qualified custodians, despite the fact that the SEC does not provide such an official certification and does not name any eligible businesses.
As a consequence of this, financial advisors who handle the virtual currencies of their customers generally use the services of a third party to store such assets.
The SEC’s accounting advice has unfortunately made it impossible for many lenders to retain digital assets since it requires too much cash. This is unfortunate for advisors who are looking for custodians.
Thailand’s SEC issued new rules for crypto advisers
In a related development, the Securities and Exchange Commission (SEC) of Thailand only a few days ago began working to better safeguard cryptocurrency investors by adopting new guidelines for crypto custody services.
The regulatory body came up with legislation that required virtual asset service providers (VASPs) to build up a management system for digital wallets in order to ensure effective custody.
The new regulations are directed against crypto custodians or VASPs that provide services related to the safekeeping of cryptocurrencies.
The laws call for the development of policies and guidelines for supervising the risk management of digital wallets and private keys. This is one of the three primary requirements that are mandated by the regulations. In order to comply with the laws, VASPs are required to communicate with authorities about such policies and present action plans.
Furthermore, the SEC demanded that cryptocurrency custodians disclose plans and processes for creating, maintaining, and administering digital wallets and keys.
The agency will also compel crypto custodians to devise backup plans in the event that the wallet management system is disrupted by unanticipated occurrences.