“We have solved the custody problem in the crypto industry,” Ric Edelman, founder of the RIA Digital Assets Council, said Monday during a virtual SALT Talk. “There are now very major players dealing with custody in the exact way I believe the SEC would want to see it.”
Edelman, who’s also founder of Edelman Financial Engines, reiterated the Securities and Exchange Commission’s objections to allowing a Bitcoin ETF: concerns about custody, volatility, price transparency and validity.
“You’ve got major players engaged here” in the custody of digital assets, Edelman said. “Fidelity, first and foremost. At Fidelity Digital Assets, they’re providing these services for the institutional marketplace; they will eventually roll it out for the retail marketplace. You’ve got companies like Kingdom Trust, which manages $19 billion in assets that’s a qualified custodian — you can use them to buy Bitcoin in your IRA.”
Edelman also noted Grayscale, with its Bitcoin and Ethereum trust products, and noted the launch on Dec. 9 of the Bitwise Asset Management Bitwise 10 Crypto Index Fund (BITW), an open-ended publicly traded statutory trust.
With these digital trust products, “I’m not so sure that it matters that we don’t have an ETF,” Edelman said.
That said, Edelman continued, a Bitcoin ETF “would be better and much cheaper than those products, and you wouldn’t have the premiums that those products have … and having the SEC as a regulator of oversight would provide a much better level of safety, security and confidence in the marketplace, helping to reduce the risk of scam and fraud and abuse — all of that is why we should have one.”
SEC staff will be seeking feedback on digital asset questions when proposed changes to the agency’s custody rule come before the commission. Karen Barr, president and CEO of the Investment Adviser Association, told ThinkAdvisor that she expects the SEC to release its proposed changes to the custody rule in the first quarter.
The SEC’s Division of Investment Management is considering recommending that the Commission propose amendments to existing rules and/or propose new rules under the Investment Advisers Act of 1940 to improve and modernize the regulations around the custody of funds or investments of clients by advisors, according to IAA’s recent Evolution Revolution report.
— Check out The One Big Question Ric Edelman Is Hearing Now on ThinkAdvisor.