SEC Safeguards Interests of Crypto Industry Rather than Investors’ Assets

WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policyfor Better Markets, issued the following statement after the Securities and Exchange Commission (SEC) proposed rules allowing investment advisers to self-custody crypto assets:

“Investors deserve to know that their securities are properly safeguarded. That is why the SEC has long imposed rigorous rules regarding the custody of client assets. For traditional securities, investment advisers must maintain custody with only so-called qualified custodians, such as banks or broker-dealers. The SEC itself recognizes that this is to guard against the risk that the adviser ‘loses, misuses, or misappropriates client assets.’ Yet the SEC now proposes to allow advisers to themselves maintain custody of clients’ crypto asset securities. This subjects investors to the very high risk of loss the SEC exists to prevent.

“There is no reason for the SEC to endanger investors in this way. The SEC acknowledges the ‘inherent conflicts of interest associated with self-custody.’ Yet it is so beholden to the crypto industry, and so desperate to give the crypto industry everything it wants, that it is willing to throw out the regulatory framework that has long protected investors and create a new regulatory regime with lax standards for the sole benefit of crypto companies.