SEC concludes third crypto roundtable on the subject of crypto custody
The third crypto Roundtable of the SEC took place yesterday. He concentrated on the subject of custody. Here is a summary.
Participant and agenda
The third round table of the Crypto Task Force of the US Securities and Exchange Commission (SEC) “Know Your Custodian: Key Considerations for Crypto Custody“. He is the first round table in which the new chairman of the SEC Paul Atkins attends this role.
The round-table gathered leading representatives of the crypto industry to obtain current views on the topic. The participants who are not part of the SEC included:
- Jason Allegrante, Fireblocks
- Rachel Anderika, Anchorage Digital Bank
- Terrence Dempsey, Fidelity Digital Asset Services, LLC
- Mark Greenberg, Kraken
- Veronica McGregor, Exodus Movement, Inc.
- Baylor Myers, BitGo, Inc.
- Brandon Russell, Etana Custody Inc.
- Tammy Weinrib, Copper Technologies Ltd.
The roundtable was part of a series that covers topics such as trade (April 11th), tokenization (May 12) and Defi (June 6), and reflects a change in the SEC towards a more cooperative attitude towards the crypto industry, away from the previous “Regulation by Enforcement” strategy under ex-chair Gary Gensler.
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Current state of regulation in the USA
The SEC 2023 proposals to update the custody rules, which were criticized by industry as impractical. Accordingly, the discussion was directed to introduce realistic regulations and the established best practice.
Mark Greenberg von Kraken pointed out that there are currently only a few qualified storageers who can offer crypto solutions. The SEC should make sure that its regulation does not lead to getting inexperienced actors into this business area, which ultimately does not cope with the requirements of the cryptom market. Krypto would differ fundamentally from other financial areas.
Greenberg emphasized the need for clear and specific regulatory requirements for crypto custody, since existing rules for traditional financial institutions (e.g. broker dealer) are not tailored to the technological requirements of crypto-assets, in particular with regard to 24/7 trading and private key management.
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Self Custody vs. Institutional Custody
In general, the discussion took place from two different points of view. The self-preservation in the crypto area, in which investors keep their assets themselves through private keys or seed phrases themselves and institutional storage.
In general, due to the predominantly institutional representation in the Crypto Roundtable, the side of the self -preservation was neglected. An exception was McGregor, whose company Exodus Movement, made it possible.
It emphasized the importance of self-customer models. She argued that such decentralized solutions embody the spirit of cryptocurrencies and give users more autonomy. It asked the SEC not to regulate self-customer to over-regulate the freedom of users, while protective measures are being developed for less experienced investors at the same time.
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