SEC seeks new rules for crypto platforms

The U.S. Securities and Exchange Commission proposed new rules on February 15 to regulate the crypto industry.

The U.S. Securities and Exchange Commission on February 15 proposed new rules to regulate the crypto industry. This comes from a press release from the agency.

Under current rules for registered investment advisers, they must hold their clients' cash and securities with a "qualified custodian". The new rules are meant to expand this safety standard.

According to these rules, crypto platforms would not be considered qualified custodians. SEC chief Gary Gensler explains: "Based on how crypto platforms generally operate, advisers can't rely on them as qualified custodians."

"Instead of properly segregating investors' crypto, the platforms have mixed these assets with their own crypto or other investors' crypto," he continues. This points to the recent scandals around the failed crypto exchange FTX.

Drafting this regulation has, however, been slow, according to SEC officials. The agency is acting under the Dodd-Frank Act with plans for the new rules. The act was enacted in 2010 after the global financial crisis to overhaul the regulatory landscape.

So while the SEC gears up to regulate the crypto market, the first moves are already in place: Kraken has had to suspend its staking offering and Paxos faces a lawsuit.