SEC Approves This U.S. Exchange’s Custody Service, While Coinbase’s Remain Uncertain
The Securities and Exchange Commission (SEC), voted 4-1 Wednesday to propose major changes to federal regulations. These changes would allow for the expansion of custody rules to include assets like cryptocurrency and require companies that are registered to hold customer assets. After the SEC voted 4-1 in favor of major changes to federal regulations, the vote was taken.
Gemini Trust Gets Green Signal
The U.S. financial watchdog has taken a new step to limit the custody policy for cryptocurrency exchanges. Other federal regulators are also working hard to prevent banks and custodians from holding customer cryptocurrency assets. Tyler Winklevoss (founder of Gemini cryptocurrency exchange) said that the SEC has officially recognized Gemini Trust as a qualified custodian of cryptocurrencies.
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Gemini Trust Company LLC is a New York trust company that has been recognized since 2015 as both a competent custodian and a fiduciary under the New York Banking Law. Tyler stated that this will continue to be the case, regardless of what new rule the SEC adopts and puts into effect.
1/ We are happy to see that the @SECGov’s proposed custody rulemaking recognizes that @GeminiTrustCo qualifies as a custodian.
Tyler Winklevoss (@tyler), February 17, 2023
Gemini’s Big Regulatory Win
Gemini Trust claims that it uses technology that is especially concerned with digital assets because crypto custody raises many issues that are not present when traditional asset management is used. Tyler was quoted saying:
We have developed a best-in class custody approach, which was all created under the direct supervision of the NYDFS.
Banks, trust corporations, and securities brokers-dealers are all examples of qualified custodians. Despite this, Coinbase, a cryptocurrency exchange, has started to offer the service over the past few years. This is due to the complexity of preventing assets like bitcoin from being stolen or hack.
Tyler also stated that Gemini Trust has received SOC 1 Type II Certifications and SOC 2 Type II Certifications for its custody product. It is subject to cybersecurity, capital, BSA/AML and cybersecurity regulations. Gemini Trust Company is also subject to regular inspections in a manner that is similar to a bank. These compliance requirements are a way to verify that Gemini Trust Company’s operations and security procedures meet the highest standards.
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