A group of nine lawmakers in the US House of Representatives is seeking clarity from the country’s financial regulator SEC regarding broker-dealer custody of digital currencies. The lawmakers believe that this could spark greater digital security adoption, which would improve the securities markets’ functioning. The US lawmakers penned the letter to the SEC chairman Jay Clayton, urging him and the Financial Industry Regulatory Authority to stop lagging behind in the regulation of broker-dealer custody of digital securities.
Lawmakers urge SEC to develop requirements necessary to custody digital securities.
The US lawmakers referenced the July guidance by the Office of the Comptroller of the Currency (OCC) in which he allowed national banks to provide digital currency custody. The group of lawmakers wrote, “In light of this development, we encourage the SEC to develop requirements necessary to custody digital securities and enable FINRA to approve broker-dealer applications that meet these requirements.” Earlier this year, the SEC and FINRA had acknowledged the issue in a joint statement. Both agencies claimed to be addressing many issues before they approve digital currency firms to become broker-dealers.
FINRA CEO criticized the two agencies’ approach.
The group of lawmakers noted that the two agencies haven’t followed up since acknowledging the issue over a year ago. They believe that this lack of guidance “threatens to stymie the progress of the digital security industry in the United States.” “Failing to approve broker-dealer applications involving the custody of digital securities leaves the industry without the infrastructure to operate in a regulated way,” they wrote. The lawmakers’ group consisted of Minnesota’s Tom Emmer, California’s Ro Khanna. Florida’s Darren Soto, Texas’ Dan Crenshaw, North Carolina’s Ted Budd, South Carolina’s Ralph Norman, Illinois’ Bill Foster, Arizona’s David Schweikert, and Ohio’s Warren Davidson.
