The Biden administration wants legislation that would keep exchanges’ funds separate from users’ funds. With this legislation, the management aims to prevent user victimization in the event of a possible bankruptcy.
The Biden administration is pushing for legislation that would allow crypto-asset trading platforms to keep their own funds separate from their clients’ funds, according to a report Coindesk said to have knowledge of the matter. The move comes after an SEC document where the largest US crypto-asset trading platform, Coinbase, announced that user funds are subject to bankruptcy proceedings in the event of a possible bankruptcy.
The proposed retention rule is already a standard for financial firms. However, this does not apply to crypto-asset trading platforms. With this legislation, the management plans to end this practice for crypto platforms as well.
Coinbase, in a filing with the U.S. Securities and Exchange Commission (SEC) last week, states that “crypto assets that we hold in custody on behalf of our clients in the event of bankruptcy are subject to bankruptcy proceedings and such clients may be considered our general unsecured creditors.” had placed.
SEC Chairman Gensler, known for his “investor protection” issues, also made a statement on the subject and used the following statements:
“When you enter a digital wallet, you realize that you really own its tokens. don’t think (…) If the platform crashes, guess what? You only have a counterparty relationship with the Platform. You stand in line in bankruptcy courts.”
