Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
SEC may be seeking to establish a definition for “Qualified Custodian” to easily identify companies that fall into that category for easy supervision.
The US Security Exchange Commission (SEC) has requested public comments on what “Qualified Custodian” means in crypto following ongoing claims. This came about after a wealth management firm called Two Oceans labeled itself as a “Qualified Custodian” as they seek to provide custody to virtual currencies and other digital assets.
Thinking authorities would subject them to punishment or take appropriate action against them, Wyoming division of banking issued a letter stating there will not be any enforcement action against the wealth management firm despite publicly classifying itself as a “Qualified Custodian”.
According to the Wyoming division, Two Oceans will not be legally dealt with as long as they operate within the framework of the law and rules that guide the safekeeping of assets. The said laws are Wyoming and federal law. This made SEC issue a statement on the “Qualified Custodian” issue making Andrea Tinianow, an Attorney to believe that the move would go a long way to benefit the investment community specifically the institutional investors. According to her, SEC just proved that cryptocurrencies are not going away but instead, obtaining a lot of popularity.
After SEC noticed that the Wyoming division letter put into consideration both the state and the federal law, they issued a statement requesting public input on “Qualified Custodian”. According to the information, future clarity may be provided by amending the existing guidance based on the received responses.
Philip Angeloff, an expert and attorney believes that Custody and other cryptocurrency issues are being looked into by SEC based on the issued statement, though Its process may be difficult. SEC may be currently considering how cryptocurrencies may be in line with the existing regulatory framework.
According to Angeloff, the statement issued by SEC does not contradict the view of Wyoming’s division of banking in any way. The statement instead looks like SEC is already considering this but yet to conclude its position. SEC may be seeking to establish a definition for “Qualified Custodian” to easily identify companies that fall into that category for easy supervision.
The letter provided by Wyoming division banking suggests that other firms may need to get an approval letter of their own to become “Qualified Custodian” and when the facts provided by the firm materially change, the guidance within the letter may not apply. The general counsel of the Wyoming division banking, Chris Land in a statement revealed that SEC would not have invested time and resources in this area if cryptocurrency is going away.
According to him, both their letter and that of the SEC agree, establishing they have shared power in the custody area. Land also stated that the question of how digital assets are related to “Qualified Custodian” does not apply to Bitcoin as it only looks at security. Land added that SEC has shown that they are looking into the view that digital securities can be stored on a distributed ledger.