SEC's Crypto Custody Proposal Falls Short on DeFi Questions
Bitwise General Counsel Johanna Collins-Wood welcomed the SEC's new crypto custody proposal, but expressed concern that it doesn't fully address questions about decentralized finance (DeFi).
The proposal, which was published in the Federal Register, would allow registered investment advisers and regulated funds to custody certain crypto assets and offer crypto investments. It also includes potential pathways for self-custody and authorizes state trust companies to act as custodians.
Collins-Wood said that the framework 'thoughtfully addresses problems crypto asset managers have faced since 2017', but noted that it relies on an assumption about how DeFi works that may not be accurate.
She pointed out that the proposal doesn't fully describe how DeFi works and that the SEC is inviting comments on this issue through questions 171 to 180.