SEC Asked By US Lawmakers To Clarify Crypto Rules For Broker-Dealers

Nine lawmakers within the US House of Representatives have teamed up to seek clarity regarding regulations over the custody of digital currencies for broker-dealers, asking the US financial regulators about it.

As it stands now, this group of lawmakers stands convinced that digital currencies and their adoption could be led to greater heights through some clarification. This, in turn, would see the securities market’s overall increase in functionality.

Threats To The US Crypto Space At Large

The letter itself was penned by the lawmakers and addressed the Securities and Exchange Commission, or SEC. In particular, the letter is targeted at one Jay Clayton, the Chairman of the organization. The lawmakers have urged Clayton, as well as the Financial Industry Regulatory Authority (FINRA), to start catching up when it comes to crypto custody regulation for broker-dealers.

In particular, the lawmakers made reference to the Office of the Comptroller of Currency (OCC) issuing out a guidance back in July, stating that national banks within the US were allowed to provide crypto custodian services.

The letter stipulated that, in light of the OCC already giving out guidance, they actively encourage SEC to do its part in the development of custodian requirements. From there, they request that it allows FINRA to start the approval process for any broker-dealer attempting to meet said conditions.

Lack Of Clarity Damaging Crypto Space

Through a joint statement made back in July of 2019, both FINRA and the SEC actively acknowledged the issue. At that time, it was claimed that a number of issues need to be addressed first before any crypto firm could get the green light to serve as a broker-dealer. Of these issues, it’s stated that consideration needs to be done whether or not crypto are securities that fall under the Securities Investor Protection Act.

Even so, the lawmakers sending the letter pointed out that neither of the two agencies has gone out to acknowledge the issues since. As such, the letter claims that this lack of guidance could potentially stunt the US crypto industry’s growth, making it take longer than it should.

Both Sides Keen On Seeing This Through

The letter explained that the issue with failing to give the various broker-dealers seeking crypto custody services their approval, or even refusal, is that there is no way for the industry to develop an infrastructure. With no infrastructure, the space can’t operate in any regulated way.

As for the lawmakers themselves, it stands as a bipartisan group. The lawmakers themselves are: Ro Khanna (California), Tom Emmer (Minnesota), Dan Crenshaw (Texas), Darren Soto (Florida), Ralph Norman (South Carolina), Ted Budd (North Carolina), David Schweikert (Arizona), Bill Foster (Illinois), and Warren Davidson (Ohio).