The U.S. Securities and Exchange Commission (SEC) has proposed toughening cryptocurrency custody rules after the collapse of several high-profile crypto firms revealed users’ funds weren’t as safe as advertised.

The European Central Bank (ECB) has advised banks in the European Union to start applying caps on Bitcoin holdings ahead of global standards established by the Basel Committee on Banking Supervision (BCBS).

Interactive Brokers (IBKR) has started offering professional investors in Hong Kong cryptocurrency trading services, through a partnership with digital asset exchange OSL Digital Securities.

 Top stories in the Crypto Roundup today:

• SEC Pushes For Tougher Crypto Custody Rules
• ECB Advises Banks to Apply Caps on Crypto holdings
• Interactive Brokers Launches Crypto Trading for Professional Investors in Hong Kong
• Bitcoin Block Size Hits New All-Time High

SEC Pushes For Tougher Crypto Custody Rules

The U.S. Securities and Exchange Commission (SEC) has proposed toughening cryptocurrency custody rules after the collapse of several high-profile crypto firms revealed users’ funds weren’t as safe as advertised.

The SEC agreed to propose rules that would force investment advisers to secure all client assets they manage, including alternative assets such as digital currencies and art, with qualified custodians.

The proposed crackdown comes after a series of failures in the cryptocurrency space, where companies’ marketing suggested user funds were segregated, when in reality they were considered unsecured assets and part of the failed firm’s estate.

The new rules are designed to cover all assets, but cryptocurrencies stood out after last year’s collapse of firms like BlockFi, Celsius Network, and FTX. When introducing the proposal, SEC Chair Gary Gensler said:

“This] proposal, in covering all asset classes, would cover all crypto assets — including those that currently are covered as funds and securities and those that are not funds or securities.”

A number of crypto exchanges not only serve as custodians for customer assets but also engage in borrowing and lending of these assets to customers. The proposed regulation requires investment advisers to establish written agreements with qualified custodians to safeguard a client's assets in the event of the custodian's collapse.

Typically, qualified custodians consist of heavily regulated financial institutions such as banks, broker-dealers, and trust companies. These measures are intended to ensure asset segregation and protection for clients.

ECB Advises Banks to Apply Caps on Crypto holdings

The European Central Bank (ECB) has advised banks in the European Union to start applying caps on Bitcoin holdings ahead of global standards established by the Basel Committee on Banking Supervision (BCBS).

The ECB said that banks should treat digital assets as risky and to limit holdings right away. In a newsletter, it wrote:

“The BCBS standard is not yet legally binding pending its transposition in the European Union- However, should banks wish to engage in this market, they are expected to comply with the standard and take it into account in their business and capital planning.”

The BCBS has proposed to assign the highest possible risk weight of 1,250% to unbacked digital assets such as BTC, which means banks have to issue capital equal to their cryptocurrency holdings. The banks would also be limited to holding crypto up to 1% of their core Tier 1 capital.

Interactive Brokers Launches Crypto Trading for Professional Investors in Hong Kong

Interactive Brokers (IBKR) has started offering professional investors in Hong Kong cryptocurrency trading services, through a partnership with digital asset exchange OSL Digital Securities.

Eligible IBKR clients include individuals with over 8 million Hong Kong dollars (around US $1 million) and institutions with over 40 million Hong Kong dollars (around US $5 million). The platform aims to allow clients to invest in Bitcoin and Ether via a single platform, alongside stocks, options, bonds, futures, and more.

In June, the two companies collaborated to launch cryptocurrency trading in Hong Kong, citing the city's large population of institutional and professional investors.

Bitcoin Block Size Hits New All-Time High

The Ordinals protocol, which has caused controversy by allowing NFTs to be embedded in Bitcoin transactions, has gained significant traction within the Bitcoin blockchain. This has reignited the debate over whether the Bitcoin network should be utilized for purposes beyond financial transactions.

As a consequence, the 7-day average number of transactions has soared to 313k, the highest level since February 2021. On the 6th of February, the block size reached an all-time high of 2.20 MB. Additionally, the average monthly hash rate has surged by 10.3% to 275.4mn TH/s, resulting in the highest month of electricity consumption in the history of the Bitcoin network.

Expand your knowledge of the digital asset industry further with CryptoCompare’s latest Asset Report.  This report represents data up to February 9th.

State of the Crypto by Top Tier Exchange Volume

Build your project with CoinDesk Data

Terms | Privacy

13 Charles II St, SW1Y 4QU

London, UK

This email may include advertisements by third parties. None of the advertised or promoted products and services have been verified or approved by us and this email is not any endorsement by us of the third party or of their products or services.