Grayscale is worried the SEC may ban it from using Coinbase
Previously, Grayscale stored cold wallets via a company called Xapo Inc. “Xapo’s custody model relied on geographically dispersed physical vault locations around the world, which changed regularly,” he wrote.
The SEC’s proposed rule would upend Grayscale’s entire model for storing its $5.4 billion in client assets, Sonnenshein said. “As an institutional-grade asset manager, we do not ourselves custody client assets. Instead, we engage expert third-party custodians to provide this service, as is the norm for traditional asset managers. In our ten years of operation, our custodians have never experienced a loss of client assets.
“None of these custodians have ever reported a loss of client assets,” Sonnenshein wrote. “In short, the methods that we and others rely on to safeguard client assets work, and we caution the Commission against taking action that would impose significant new costs, risks, and burdens without added benefit.”. “The proposal would ban [registered investment advisers] from trading on non-QC [qualified custodian] crypto exchanges," Chief Legal Officer Paul Grewal said in a tweet yesterday.
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