Pro-Blockchain Congressmen Wants Clarity On Crypto Custody

The Pro-Blockchain congressmen group signed a letter to the SEC Chairman Jay Clayton, demanding for more clarity on crypto custody so let’s find out more in today’s latest crypto regulation news.

The bipartisan group of Pro-blockchain congressmen, wrote a letter to Jay Clayton, the SEC Chairman, citing lack of guidance from the regulator which only left the crypto-broker dealers in a state of limbo. They demand more clarity around the broker-dealer applications to FINRA.
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The group of nine congressmen signed the letter to SEC’s Chairman and asked for more clarity for the companies in the crypto space.

. @BrianBrooksOCC and the @USOCC have provided clarity for banks to custody crypto – now it’s @SEC_News’ turn. Today, I led a letter with 8 of my colleagues urging the SEC and @FINRA to issue guidance and approve broker-dealer applications to custody digital securities. pic.twitter.com/ZTb4UI13L3

— Tom Emmer (@RepTomEmmer) December 9, 2020

The signatories include Tom Emmer, Bill Foster, Darren Soto, and David Schweikert all of whom are co-chairs of the Congressional Blockchain Caucus along with Ted Budd, Warren Davidson, Ro Khanna, and Ralph Norman who are members. Dan Crenshaw was the only non-member that signed the letter. According to the press release, the congressmen request:

“First, issue a formal clarification that banks may act as good control locations for the custody of digital securities. Second, advise FINRA on the specific criteria that must be met for broker-dealers to custody digital securities for their customers and for their own account. Third, instruct FINRA to approve broker-dealer applications that meet those requirements.”

In order for the company to issue securities aimed at US investors, either digital or conventional, they would have to register with the Financial Industry Regulatory Authority which is the self-regulatory organization authorized by the government to grant official broker-dealer status. Once the company becomes the broker-dealer in the eyes of FINRA, it will be able to start buying and selling securities for clients as well as hold digital currencies. However, FINRA is unsure what to do with the crypto companies.

The letter to Clayton said:

 “in the absence of guidance from the SEC, FINRA has not outright denied any broker-dealer applications that involve the custody of digital securities, which would render the applications eligible for appeal.”

As evidence, they pointed out that FINRA and SEC issued a joint statement back in 2019 saying that more companies are looking to invest in digital currencies but none of the organizations did anything in the way of providing guidance. The congressmen were asking that the SEC helps FINRA to guide the companies towards becoming approved broker-dealers and that the SEC will confirm the banks are able to hold digital securities which is something that the Office of The Comptroller of the Currency has already suggested.