SEC Chair Gensler says crypto platforms not necessarily qualified custodians

In prepared remarks before the Investor Advisory Committee of the SEC, Chairman Gary Gensler said in part: "The Commission recently proposed a new safeguarding rule for investment advisors, building on the current, 2009 custody rule. The proposal takes up Congress’s 2010 provision for us to expand the custody rule to cover all of an investor’s assets, not just their funds or securities…I know there’s been recent attention to this proposal regarding its intersection with crypto. Make no mistake: Our current custody rule, adopted in 2009, covers a significant amount of crypto assets. Advisers, in complying with the current custody rule, are required to safeguard investors’ crypto funds and securities with qualified custodians. Make no mistake, again: Based upon how crypto trading and lending platforms generally operate, investment advisers cannot rely on them today as qualified custodians. To be clear: just because a crypto trading platform claims to be a qualified custodian doesn’t mean that it is. When these platforms fail-something we’ve seen time and again-investors’ assets often have become property of the failed company, leaving investors in line at the bankruptcy court. The new proposed safeguarding rule-in addition to expanding the custody rule’s safeguards to cover all assets-would make important enhancements to the protections that qualified custodians provide. I welcome your thoughts on the proposal, as well as the letter I understand you will be submitting regarding the crypto markets. Publicly traded companies that may be impacted by this include Coinbase (COIN). Reference Link