Global Blockchain Business Council (GBBC) and GBBC Digital Finance (GDF) sent in a submission commenting on the Securities and Exchange Commission (SEC) Proposed Rule entitled, “Safeguarding Advisory Client Assets,” released on February 15th, 2023. A special thank you to our members who contributed to this response. GBBC and GDF thank the SEC for its attention and welcome an open dialogue.

The Proposed Rule is significant and will affect numerous industry participants, including RIAs, investors, custodians of assets, and others. If adopted as proposed without significant changes, the Proposed Rule will restrict the ability of RIAs to interact with crypto assets and will create costly new requirements on crypto asset transactions that will be borne in large part by U.S. investors, RIAs and certain other organizations that will be excluded from serving as qualified custodians.

Therefore, we encourage the SEC to:

  • Issue specific guidance with respect to the manner in which crypto assets may be held by a qualified custodian in compliance with the Proposed Rule.
  • Propose custody arrangements that would meet the stated goal of the Proposed Rule which include leveraging technological solutions to safeguard crypto assets, such as multi-party computation wallets integrated with exchange platforms
  • Extend the effective date for RIA compliance.
  • Ensure that there are crypto-focused qualified custodians that have regulatory approval to allow RIAs to utilize their services.
  • Consider market-based solutions such as insurance that could help to enhance protection and security for the public.
  • Release guidance as to how (FFIs can meet the requirements introduced in the Proposed Rule.

Read the full response here.