Today we are diving into the SEC’s existing “Custody Rule”, and its recent proposal to update and replace the Custody Rule with a new “Safeguarding Rule”. The Custody Rule applies to registered investment advisers that have custody of client assets. The newly proposed Safeguarding Rule would apply similarly but make important and specific updates and changes, notably among them, applying the rule explicitly to digital assets (and other client assets). It’s important to remember that as of now, the Safeguarding Rule is only a proposal, not an actual rule.

Key Points From This Episode:

• Understanding the definition of “custody” and the contours of the Custody Rule.
• Analyzing the ambiguities in applying the Custody Rule to digital asset fund managers.
• Summarizing key pieces of the proposed Safeguarding Rule.
• How the proposed Safeguarding Rule, if implemented in its current form, might impact crypto as an asset class.
• What steps must occur before the proposal can become an actual rule.
• Appreciating the proposal’s departure from “regulation by enforcement”. 

Disclaimer:

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/

Links Mentioned in Today’s Episode:

SEC Release Regarding Proposed Safeguarding Rule - https://www.sec.gov/rules/proposed/2023/ia-6240.pdf

SEC Commissioner Hester Peirce Statement on Safeguarding Rule Proposal - https://www.sec.gov/news/statement/peirce-statement-custody-021523

SEC Commissioner Mark Uyeda Statement on Safeguarding Rule Proposal - https://www.sec.gov/news/statement/uyeda-statement-custody-021523

Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/

Cole-Frieman & Mallon LLP - https://colefrieman.com/

Music by Joe Ginsberg - https://www.instagram.com/thejoeginsberg

For any questions or comments, email: [email protected]