Traditional Financial Companies and Cryptocurrency Custodians to Benefit from US Regulatory Changes

02/22/2023 05:20 • AI & Tech Insights • 78 views

On February 22, it was reported that due to the existing license portfolio and the credibility in handling customer funds, traditional financial companies and the cryptocurrency custodians they support may be most able to take advantage of the proposed changes made by US regulators to protect digital assets.

Bloomberg: Wall Street is expected to benefit from the regulatory restructuring of cryptocurrency in the United States. Large banks may cooperate with cryptocompanies to launch services

Interpretation of the news:

The digital asset market has gone through several ups and downs in recent years. This has led regulators worldwide to take a closer look at the cryptocurrency industry and issue guidelines to protect investors’ interests. The proposal made by US regulators to protect digital assets has come as a sigh of relief for many investors who have been skeptical about investing in cryptocurrencies.

The report of February 22 suggests that traditional financial companies and cryptocurrency custodians are likely to benefit the most from these regulatory changes. This is because they are already in possession of a license portfolio and have gained their customers’ trust by handling their funds effectively. As a result, they have a better chance of adapting to the proposed regulatory changes more effectively than the other players in the market.

The proposed regulation aims to provide more robust protection to the digital assets owned by customers. The regulation requires cryptocurrency exchanges to identify their customers and implement effective anti-money laundering measures. Furthermore, exchanges should maintain accurate records of transactions and report any suspicious activity to the authorities. The regulation also states that cryptocurrency exchanges should store digital assets in cold wallets, which are offline storage devices, to prevent hacking and cyber-attacks.

Traditional financial companies, such as banks and brokerage firms, have established credibility in handling customer funds over several years. They are already licensed and regulated by government authorities to ensure that the funds they hold for their clients are safe and secure. Cryptocurrency custodians, on the other hand, specialize in holding digital assets safely for their customers. They are also licensed and regulated by government authorities, providing them with an advantage over other players in the market.

In conclusion, the proposal made by US regulators to protect digital assets will bring much-needed stability and security to the cryptocurrency market. Traditional financial companies and cryptocurrency custodians are well-positioned to benefit from these regulatory changes as they have already established credibility in handling customer funds and have the necessary licenses to operate. It is important to note that this does not mean that other players in the market will be left behind. The proposed regulatory changes will create a level-playing field, where all market participants will be required to comply with the same rules and regulations, ultimately increasing customer trust in the digital asset market.

Overall, the message suggests that traditional financial companies and cryptocurrency custodians can leverage their existing licenses and customer trust to take advantage of the proposed US regulatory changes to protect digital assets.

Reference:
https://www.finextra.com/newsarticle/37653/traditional-financial-firms-and-crypto-custodians-best-placed-to-benefit-from-us-regulatory-proposals?utm_medium=newsflash&utm_source=2021-2-22

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