Technology

US Regulators Possibly Paved the Way for Crypto Broker Operations

Regulators in the United States have been relatively quiet on clearing the regulatory logjam around cryptocurrency markets. However, now, they could be bucking up to clear the way for crypto brokerages to operate in the country.

Clearing the way for brokerages

Dozens of firms have been waiting for the US regulators to provide clear guidance on their operations in the country. Now, the regulators could have possibly cleared their way. New guidance on the application of securities rules on digital tokens and the compliance issues surrounding this industry could help solve a major pain point for crypto firms.

According to a statement issued on Monday by the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (Finra), cryptocurrency brokers will have to avoid comingling of company assets and customer holdings. They will also be required to maintain accurate records and books or transactions. The brokerage houses also need to use a third-party custodian for added security of assets.

Both regulators noted that they have been in talks with market participants to identify how the decades-old custody rules could apply to the crypto world. The custodians that the regulators talk about should qualify under the SEC rules. Several Wall Street firms like State Street Corp. provide such custody services by holding securities.

Why is it an important issue?

Crypto enthusiasts believe that solving the custody issue will help in bringing better and more suitable regulation to cryptocurrencies. Crypto firms have been urging the SEC to provide guidance on the digital tokens industry for months. The recent guidelines are sent a new wave of joy in the crypto markets. Bitcoin, for instance, jumped by 11% to reach $12,290 after the SEC issued these guidelines. The value of Bitcoin has increased by 3x this year.

Custody issues have been creating hurdles for roughly two dozen companies that have been seeking registration with Finra as automated trading systems or brokers. Circle and Coinbase are amongst the two companies seeking such registration, which will further legitimize their business on the US soil.

However, it must be noted that SEC and Finra haven’t cleared all hurdles in the way of crypto companies. The SEC still seems suspicious of the potential of digital currencies. According to recent reports, the IRS is planning to subpoena tech companies to know which taxpayers have been downloading crypto applications to track criminal tax issues in the digital assets industry.

Amidst these problems, if crypto companies come under the current regulatory framework, they will have to comply with the existing customer protection rules. This could be a challenging task for firms since money is stored digitally in the form of volatile tokens.

The post US Regulators Possibly Paved the Way for Crypto Broker Operations appeared first on InsideBitcoins.com.

Related posts

ENS Domain Hacker Returns His Loot In Exchange for Compensation

Michael

Ripple Price Analysis: The Market Remains Indecisive as XRP Stumbles Again with a Bearish Step Back

Michael

Founder of Crypto Revolution Sam Volkering Set to Host Anticipated ‘Beyond Bitcoin’ Event

Michael