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Coinbase’s Paul Grewal says SEC proposed custody rule ‘unnecessarily singles out crypto’

Press Releases Crypto News CryptoSlate Coinbase’s Paul Grewal says SEC proposed custody rule ‘unnecessarily singles out crypto’

Coinbase Chief Legal Officer Paul Grewal spoke up against the U.S. Securities and Exchange Commission’s proposed revisions to federal custody requirements that require registered investment advisers (RIAs) to hold client assets at qualified custodians.

The exchange officially added its comments regarding the proposed rule on May 8, the deadline for submission.

Grewal’s tweets come after Marisa Tashman Coppel, Policy Counsel for the Blockchain Association, warned on May 8 that the SEC’s rule change could “drastically curtail” crypto investment.

Grewal said in a Twitter thread that the exchange agrees with the “spirit of the proposal.”

He added:

“We’re confident Coinbase Custody Trust Company will remain a QC even if the proposal is adopted as is.”

Comments on SEC proposal

In its comments, among other issues, Coinbase disagreed with the SEC’s proposition to shift the types of banks allowed to serve as qualified custodians to include only those “subject to Federal regulation and supervision” and believes state trust companies and other state-regulated financial institutions should continue to be qualified custodians.

“The Proposal contains no policy explanation or economic analysis that would support changing the scope of banks eligible to serve as qualified custodians,” Coinbase noted in its comments, adding that such a rule requires more reasoning, reviewing alternatives, and cost-benefit analysis than the proposal provides.

Coinbase also believes the proposal requirement by the SEC for RIAs to maintain possession or control of client assets at all times is “to justify banning RIA client trades on crypto exchanges that are not qualified custodians and require pre-funding to execute transactions.”

The company believes the proposal should allow cli

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Author: Zaeem Shoaib Zuberi

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