Media: SEC launches probe into crypto custody by investment advisers

SEC is examining registered investment advisers for compliance with rules and subsidiary regulations governing the custody of digital assets. Reuters reports, citing informed sources.

According to the agency, the regulator began examining the situation several months ago. the FTX collapse accelerated the review.

Under the RIA, advisers must have the appropriate qualifications to offer custodial services in addition to complying with the custody guarantees set forth in the Investment Advisers Act of 1940.

Anthony Tu-Sekin, who heads Suward and Kisiel’s blockchain and crypto group, noted that the emergence of information about the investigation indicates that the regulator “has not turned a blind eye” to traditional investment firms.

“This is an obvious compliance issue for investment advisers. If you have client assets that are securities, you must transfer them to custody with one of these qualified custodians,” he explained.

On November 15, 2022, the Wall Street Blockchain Alliancesent the SEC a letter urging the Commission to clarify the existence of potential amendments to the Custody Rule with respect to digital assets.

As reported, in 2022 the regulator opened 30 crypto-related cases. The figure amounted to almost a quarter of the SEC’s total enforcement actions for the year — 127 cases.

Earlier, Cornerstone Research suggested that oversight of the crypto industry would remain a priority for the Commission under Gary Gensler’s leadership. They noted that in May the agency nearly doubled the size of the relevant division.

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