SEC Commissioner Questions Dual Custody System for Cryptocurrencies, Highlights Three Potential Investor Risks

Caroline Crenshaw, a commissioner of the U.S. Securities and Exchange Commission (SEC), has expressed different views on how existing securities laws should protect digital assets. She stated that the concept of custody in federal securities laws is based on the idea of trust. Implementing a dual custody system specifically for cryptocurrencies may increase risks for investors, primarily including: 1. Can a separate regulatory regime for cryptocurrency custody provide the same level of protection as existing standards? 2. How can we ensure that the regulatory regime for cryptocurrencies is as robust as the existing system? 3. How can we ensure that investors are clearly aware of the differences between the risks associated with traditional custodians and those associated with cryptocurrency custodians?