Traditional Wall Street investment advisors who might be providing digital asset custody to their clients without the necessary credentials are being investigated by the United States Securities and Exchange Commission (SEC), as reported by Cointelegraph.
According to a Jan. 26 Reuters article citing “three sources with knowledge of the inquiry,” the SEC’s investigation has been ongoing for a while but picked up speed following the failure of the cryptocurrency exchange FTX, Cointelegraph noted.
Investment advisory firms are required by law to comply with the custodial safeguards outlined in the Investment Advisers Act of 1940 and be “qualified” to provide custody services to clients.
Over the course of the year, the securities regulator has maintained and increased its efforts to enforce cryptocurrency laws. It nearly doubled the size of its “Crypto Assets and Cyber Unit” team in May 2022, Cointelegraph further stated.
(With insights from Cointelegraph)