Caroline Crenshaw, a commissioner of the U.S. Securities and Exchange Commission (SEC), questions the application of current securities laws in the field of digital asset protection, particularly regarding the highly scrutinized dual custody system in the cryptocurrency industry. She points out that the custodial framework in federal securities law is based on 'trust,' and if a dual custody system is tailored for cryptocurrencies, it may hide risks, specifically identifying three major potential hazards:
1. Can regulatory standards be aligned?
Will designing regulatory rules specifically for cryptocurrency custody truly achieve the same level of protection as traditional securities custody? Crenshaw questions whether, in the absence of unified standards, cryptocurrency investors may face the risk of 'downgraded' protection.
2. The robustness of the system is questionable
How can we ensure that the cryptocurrency custody regulatory system has the same rigor in execution as traditional systems? She worries that the unique technological complexity and market volatility of the crypto industry may render existing regulatory tools ineffective, leading to regulatory loopholes.
3. Is the risk disclosure transparent?
Can investors clearly distinguish the risk differences between traditional custodians and cryptocurrency custodians? Crenshaw emphasizes that a dual custody system may exacerbate information asymmetry. If investors cannot accurately assess the risks, they may blindly enter the market and ultimately suffer losses.
Crenshaw's statement directly addresses the core contradiction in the cryptocurrency custody field: how to balance investor protection with the needs of industry development while pursuing innovation. As regulatory attention on digital assets increases, this issue may become an important indicator for future policy making.
