link0 link1 link2 link3 link4 link5 link6 link7 link8 link9 link10 link11 link12 link13 link14 link15 link16 link17 link18 link19 link20 link21 link22 link23 link24 link25 link26 link27 link28 link29 link30 link31 link32 link33 link34 link35 link36 link37 link38 link39 link40 link41 link42 link43 link44 link45 link46 link47 link48 link49 link50 link51 link52 link53 link54 link55 link56 link57 link58 link59 link60 link61 link62 link63 link64 link65 link66 link67 link68 link69 link70 link71 link72 link73 link74 link75 link76 link77 link78 link79 link80 link81 link82 link83 link84 link85 link86 link87 link88 link89 link90 link91 link92 link93 link94 link95 link96 link97 link98 link99 link100 link101 link102 link103 link104 link105 link106 link107 link108 link109 link110 link111 link112 link113 link114 link115 link116 link117 link118 link119 link120 link121 link122 link123 link124 link125 link126 link127 link128 link129 link130 link131 link132 link133 link134 link135 link136 link137 link138 link139 link140 link141

Pro-Blockchain Congressmen Ask SEC for Clarity on Crypto Custody

Pro-Blockchain Congressmen Ask SEC for Clarity on Crypto Custody

A bipartisan group of representatives has written a letter to the SEC emphasizing “the need for regulated safekeeping services for cryptographic assets.”

In brief

  • Nine members of the House of Representatives have signed a letter to SEC Chairman Jay Clayton.
  • According to the letter, a lack of guidance from the SEC has left would-be crypto broker-dealers in a state of limbo.
  • It asks for clarity around broker-dealer applications to FINRA.

A group of nine congressmen has signed a letter addressed to SEC Chairman Jay Clayton, asking for more clarity around broker-dealer applications for companies in the crypto space.

The signatories include Tom Emmer (R-MN-6), Bill Foster (D-IL-11), David Schweikert (R-AZ-6), and Darren Soto (D-FL-9), who co-chair the Congressional Blockchain Caucus, along with Warren Davidson (R-OH-8), Ted Budd (R-NC-13), Ralph Norman (R-SC-5), and Ro Khanna (D-CA-17), who are members. Dan Crenshaw (R-TX-2) was the only non-member to sign the letter.

According to a press release from Tom Emmer's office, the congressmen request three things:

"First, issue a formal clarification that banks may act as good control locations for the custody of digital securities. Second, advise FINRA on the specific criteria that must be met for broker-dealers to custody digital securities for their customers and for their own account. Third, instruct FINRA to approve broker-dealer applications that meet those requirements."

In order for a company to issue securities aimed at US investors, either conventional (like stocks) or digital (like blockchain-based tokens offered via an ICO), it has to register with the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization authorized by the government to grant official broker-dealer status.

Once a company becomes a broker-dealer in the eyes of FINRA, it can begin buying and selling securities for clients and/or itself, as well as hold digital securities.

But FINRA may be unsure what to do with cryptocurrency firms.

The letter to Clayton asserts that “in the absence of guidance from the SEC, FINRA has not outright denied any broker-dealer applications that involve the custody of digital securities, which would render the applications eligible for appeal.” Instead, the representatives claim, those applications have been in a state of limbo.

As evidence, they point out that the SEC and FINRA issued a joint statement in July 2019 acknowledging that more and more companies were looking to hold digital securities, but that neither organization has done much about it in the way of providing guidance.

The congressmen are asking that the SEC help FINRA guide qualifying companies toward becoming approved broker-dealers, and that the SEC explicitly confirm that banks can hold digital securities—something the Office of the Comptroller of the Currency, an office of the US Treasury that’s currently being run by former Coinbase executive Brian Brooks, has already suggested.