• Fri, 19 Jul 2019, 05:12 PM
  • All times are UTC
  • Edition:
    International
Copy link
Increase text size
Decrease text size
Link copied

SEC, FINRA issue joint statement on custody issues of digital assets

Image Credit: ThinkAdvisor

Tue, 09 Jul 2019, 09:36 am UTC

The United States Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have released a joint statement clarifying the broker-dealer custody of digital asset securities.

The statement focused on key principles for both entities’ approach to broker-dealer regulation, investor protection including when assets are deemed as securities under the 1970 Securities Investor Protection Act (SIPA), and various factors related to many of these questions such as when to consider approving a broker-dealer application of crypto-related companies.

The ability of a broker-dealer to comply with aspects of the Customer Protection Rule is greatly facilitated by established laws and practices regarding the loss or theft of a security, that may not be available or effective in the case of certain digital assets,” the statement noted.

According to CoinDesk, broker-dealers in the U.S. are registered and regulated to buy and sell securities for themselves or their clients. And some firms use digital assets as securities, allowing them to cater to institutional investors that cannot hold or directly buy assets.

Apparently, although a broker can verify that it has private keys to a crypto wallet, the challenge is to prove that no other entities hold a copy of the private key, which could allow them to transfer digital asset security without obtaining permission from the broker-dealer.

In addition, if the transaction is made successfully, the custodian has no power to reverse it. And this principle is applicable to all transactions a custodian wants to cancel or reverse.

Other than custodial services, the statement also tackled non-custodial service registration, bookkeeping policies, and liquidation following SIPA’s protocol.

The joint statement was released in response to the questions raised by market participants. As previously reported, FINRA has remained cautious of approving broker-dealer licenses. As many as 40 applicants are currently on the wait list for its approval, with some waiting for more than a year already.

Despite the delays, cryptocurrency exchange Gemini is still seeking to obtain FINRA’s broker-dealer license, in a bid to make the Winklevoss-owned firm into an alternative trading system that will enable it to trade securities and allow trading securities listed on their platform.

<Copyright © TokenPost. All Rights Reserved. >

To leave a comment, please sign in.
More
  • Bitcoin (BTC) $10,399.80 (-1.22%)
  • Ethereum (ETH) $219.40 (-2.32%)
  • XRP (XRP) $0.318800 (-1.51%)
  • Litecoin (LTC) $96.46 (-4.44%)
  • Bitcoin Cash (BCH) $301.90 (-4.42%)
  • Bitcoin (BTC) $10,399.80 (-1.22%)
Jul 19, 2019 (Friday)
11:17
Crypto Technicals: XRP/USD grinds lower along 200H SMA, break below 5-DMA to see further weakness
11:12
Binance Jersey announces listing of GBP-backed stablecoin ‘BGBP’
10:32
Rape and sexual harassment case against bitcoin developer blows up
10:15
New Jersey accuses blockchain firm Pocketinns of selling $410K unregistered securities
09:59
Crypto Technicals: LTC/USD struggles at 110-EMA, bias bearish
09:58
Blockchain firm Algorand joins International Swaps and Derivatives Association
09:22
Neo, Ontology partner to develop blockchain interoperability protocol
07:35
Consumer advocates call on Libra partners to withdraw collectively from Facebook's crypto project
07:31
Apple's Steve Wozniak invests in blockchain-based energy efficiency firm 'Efforce' in Malta
07:28
Cryptocurrency exchange ErisX joins U.S. Chamber of Digital Commerce
07:26
LibertyX exceeds 1,000 bitcoin ATMs in the U.S. via new partnership
06:59
Blockchain interest dropping, DLT in trouble?
06:37
Waves founder launches Waves Enterprise to develop corporate blockchain solutions
06:03
IRS goes after cryptocurrency users misreporting transactions
05:05
Facebook's Libra, other cryptocurrencies pose risk of global economic destabilization: G7
04:42
Anchorage receives charter to open crypto custody shop in South Dakota
04:27
Bank of Thailand's DLT-focused Project Inthanon advances to Phase III
Jul 18, 2019 (Thursday)
11:52
MOBI launches first vehicle identity standard on blockchain
11:49
FATF approves Japan’s plan to establish global network for crypto payments: Report
11:13
Crypto Technicals: ETH/EUR downside pauses shy of 200-DMA, bullish divergence on intrday charts keeps scope for upside
Subscribe to the TokenPost newsletter!
Don't show me this again today.
Back to top
Copyright ⓒ TokenPost. All Rights Reserved.
PUBLISHsoft