The Securities and Exchange Commission voted 4-1 on Wednesday proposed  to expand the types of assets that investment advisers, such as hedge  funds and pension funds, are required to hold using qualified  custodians. The five-member commission voted on the proposed rulemaking  on Wednesday morning.

SEC Chair Gary Gensler has repeatedly said that crypto firms do not  comply with the rules and when these firms go bankrupt investors’ assets  often become the property of the failed company, leaving the true  owners of the assets in line at the bankruptcy court.

Chair Gary Gensler also mentioned that many investment advisers have already lost a  massive amount of money in the bankruptcies of FTX, Three Arrow Capital  (3AC), Celcius Network, Voyager Digital, and Blockfi.

Mr. Gensler said, “The current business model in crypto exchanges does not meet the qualified custodial standard.”

According to the material released by the agency, SEC is intended to  ensure client assets are properly segregated and held in accounts  designed to protect the assets in the event of a qualified custodian  bankruptcy or other insolvencies.

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