US regulator indicates broker-dealers could be allowed to trade in securities

The U.S. Securities and Exchange Commission (SEC) has indicated it could be open to digital currency custodians being allowed to handle trading in securities for digital assets, in a move that could lead to a significant change in position over regulation in the sector.

The regulator recently announced that it would allow digital currency broker-dealers a period of five years without enforcement action if they can verify they have control over customers’ digital assets.

The proposal is currently out for feedback from the industry, following calls for clarity from those operating in the sector.

“As discussed below, the Commission’s position in this statement is premised on a broker-dealer limiting its business to digital asset securities to isolate risk and having policies and procedures to, among other things, assess a given digital asset security’s distributed ledger technology and protect the private keys necessary to transfer the digital asset security.”

The announcement from the SEC has been welcomed by leading voices in the industry, with CEO of Avanti Financial, Caitlin Long, describing the move as “enabling rather than restrictive.” Carlos Domingo, CEO of Securitize, also welcomed the plans as “potentially very good news,” with the regulator demonstrating a more proactive approach to supporting the development of the industry. Kristin Smith of Blockchain Association said the greater regulatory certainty would be good for operators and consumers in developing trust in the sector: “Regulatory certainty on this issue will enable the custody marketplace to develop and give consumers the confidence they need that their digital assets are safe and secure.”

The SEC has said the initial five year period will allow more time to understand how best to regulate the space. The plans will now be opened for consultation before being introduced subject to approval.

See also: CoinGeek Live panel, Regulation of Digital Assets & Digital Asset Businesses