Crypto News: Coinbase Urges SEC to Revise Proposed Rule for Safeguarding Client Assets
Coinbase, one of the world’s leading cryptocurrency exchanges, has requested revisions to a proposed rule that requires registered investment advisors (RIAs) to store client assets with qualified custodians.
In a letter to the U.S. Securities and Exchange Commission (SEC) on May 9th, Coinbase’s Chief Legal Officer, Paul Grewal, expressed concerns that the updated RIA custody regulation unfairly targets cryptocurrencies and fails to adequately safeguard all asset classes.
Grewal argued that the proposed regulation, titled “Safeguarding Advisory Client Assets, Proposed Rule 223-1,” is misguided and inappropriate.
Despite the SEC’s designation of Coinbase Custody as a “qualified custodian,” Grewal proposes several changes to the regulation to better protect investors, including lifting the restriction on RIA client trading on non-qualified custodians and enabling sophisticated customers to modify care standards based on asset class and client type.
Coinbase’s move comes after the exchange submitted a petition with 50 specific questions to the SEC in 2022, seeking to understand the regulatory approach to digital assets and how securities rules are applied to them. The exchange is waiting for the SEC to respond before making any further decisions.
In addition, Coinbase is considering Bermuda or the United Arab Emirates (UAE) as a central location for its overseas operations. However, the exchange wants to hear from the SEC about how digital assets are regulated before making any definitive decisions.
With the growing popularity of cryptocurrencies and digital assets, it is essential to have a regulatory framework that safeguards all asset classes. Coinbase’s request for revisions to the proposed rule is a step towards achieving this goal, and it will be interesting to see how the SEC responds to the exchange’s concerns.