The U.S. Securities and Exchange Commission (SEC) has proposed new rules (1) that would require cryptocurrency custodians to register as national clearing agencies, drawing criticism from crypto advocates. The proposed rules would increase regulatory oversight of digital assets and have faced opposition (2) from those who claim they would stifle innovation and unfairly burden small companies.
Criticism from Crypto Advocates
Crypto advocates have taken issue with the proposed rules, claiming they would effectively stifle innovation in the industry. The rules would require custodians to register as national clearing agencies, a process that could take up to a year and cost hundreds of thousands of dollars. Many smaller companies would be unable to afford the costs associated with registration, effectively pushing them out of the market.
Newly filed letters from a variety of organizations, including the Electronic Frontier Foundation (EFF) and the Competitive Enterprise Institute (CEI), lambasted the proposed rules as being overly broad and lacking in specificity. The EFF letter, signed by a coalition of over 20 organizations, stated that the rules would have a chilling effect on the industry and could result in the censorship of free speech. The CEI letter claimed that the rules would have a disproportionate impact on small businesses and that the SEC had failed to adequately consider the potential consequences of the rules.
Increased Regulatory Oversight
The proposed rules are part of a broader effort by the SEC to increase regulatory oversight of digital assets. The agency has been under pressure to take action on cryptocurrencies following a series of high-profile hacks and scams. Many lawmakers and industry experts have called for increased regulation to protect consumers and prevent fraud.
Critics of the proposed rules argue that they are unnecessary and will do little to prevent fraud. They claim that the industry is already highly regulated and that additional oversight will only serve to burden legitimate businesses. They also argue that the rules will discourage innovation and investment in the industry, as companies will be hesitant to enter the market due to the increased regulatory burden.
The proposed SEC custody rules have faced significant opposition from crypto advocates, who claim they would stifle innovation and unfairly burden small businesses. Newly filed letters from a variety of organizations have criticized the rules as being overly broad and lacking in specificity. The proposed rules are part of a broader effort by the SEC to increase regulatory oversight of digital assets, but critics argue that they are unnecessary and will do little to prevent fraud.