Web3 venture capital fund Andreessen Horowitz called the new regulation a "misguided and transparent attempt to wage war on crypto."
The Securities and Exchange Commission's (SEC) proposal to tighten rules on cryptocurrency custody has been met with a heated response from crypto advocates.
Two letters opposing the proposed rule changes were recently filed by industry supporters, the Blockchain Association and Web3 venture capital fund Andreessen Horowitz (a16z).
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
How to Trade NFTs Safely? (Animated Explainer For Beginners)
The Blockchain Association voiced its concerns on May 8th, stating that the SEC's proposal to amend its custody rule would significantly hamper investment in digital assets and is unlawful in its present form.
Similarly, a16z sent a letter three days earlier, harshly criticizing the proposal as a "misguided and transparent attempt to wage war on crypto."
The letter by the Blockchain Association presented over a dozen arguments against the SEC's proposal, claiming it exceeds the SEC's authority, would prevent advisors from transacting with crypto exchanges, and leave investors' assets more vulnerable.
A16z's letter echoed these points, emphasizing the negative effects on registered investment advisers. On top of that, a16z called SEC's decision to not allow advisor trade crypto "illegal, unworkable and dangerous."
The proposed rule changes include more stringent requirements for investment advisors in the custody of assets, such as crypto. Firms would need to segregate assets properly, and custodians would be subject to annual audits from public accountants, among other transparency measures.
Even within the SEC, the proposal has faced opposition, with Commissioner Hester Pierce questioning its "workability and breadth" and its apparent targeting of crypto and related companies.
In other news, the US securities regulator was holding off on finalizing the term "digital assets" in new reporting guidelines for hedge and private equity funds.
