US SEC has voted to approve a proposal to tighten crypto custody requirements

The U.S. Securities and Exchange Commission voted 4-1 to approve a proposal that would expand the types of assets that investment advisors such as hedge funds and pension funds must use qualified custodians to hold, the Wall Street Journal reported. The proposal would also introduce new requirements for qualified custodians, noting that certain characteristics of cryptocurrencies could make it difficult to comply with the rules, and would limit how asset managers can handle clients' crypto assets, but not for managing their own portfolios. Individual investors put forward new requirements. Foresight News previously reported that the rule would expand current custody requirements to include disclosure of any client assets held by investment advisers and would add more protections to those assets, such as unannounced inspections. In addition, the rule requires placing client assets in a qualified custodian such as a bank or proprietary broker, segregating an investor's assets, and entering into a written agreement with a qualified custodian to ensure certain protections for clients.