Will only banks soon be allowed to custody crypto in the US?
2 min readThe cards of the crypto industry in the US are being reshuffled – in favor of regulated banks and Wall Street. At least when it comes to the SEC, the US financial regulator. Because it proposed new rules for regulating the crypto industry last week. And they have it all.
Only “qualified custodians” should therefore hold cryptocurrencies, for the “security” of customers. Who doesn’t belong for the SEC? Most crypto platforms. They “could not be relied on.” The push is a response to the FTX scandal. The second largest stock exchange in the world speculated with customer investments – and went bankrupt in November 2022.
Regulated crypto banks
The big winners of this solution: Regulated crypto banks like Anchorage Digital, founded in 2017. Its investors include Goldmann Sachs, for example, but Coinbase and Gemini, two of the largest US crypto exchanges, should also benefit. They have the necessary licenses and have declared that they will comply with the regulations. Coinbase also partners with Goldman Sachs and BlackRock, the largest wealth manager in the world.
“A new gatekeeping system will be created where the only custody solution is regulated banks,” warns Maya Zehavi, a crypto investor, to Bloomberg. Ram Ahluwalia, CEO of the investment platform Lumida Wealth Management, also draws this conclusion on Twitter: “The regulators are pushing crypto activity further into the area of regulated banks.”
All crypto platforms that don’t get a green light from the SEC
With this design, the financial supervisory authority has a powerful lever to shape the landscape as it sees fit. That shows the example of another case, Paxos. Two years ago, the stablecoin provider applied for a license from the financial regulator. To date, the application has not been processed. There was a warning for this recently: The stablecoin is actually a security.
The push comes in the wake of a major crypto crackdown in the US. The SEC and other authorities are shooting at crypto-friendly banks and crypto exchanges, issuing harsh threats, demanding hefty fines, issuing bans. The industry is shaking. At the end of this development there could be a crypto industry 2.0, BTC-ECHO editor-in-chief Sven Wagenknecht also suspects: “shaped by new players”, especially the “Wall Street clique”.
