Washington, May 19: The Biden administration plans to ask Congress to press cryptocurrency exchanges to keep their customers’ money separate from their own corporate funds to avoid enmeshing of the two in the event of a crisis, cryptocurrency exchange platform Coinbase said in a report.
Spurred by Coinbase’s recent disclosure that customers’ money would be jammed up if the company declared bankruptcy, federal officials intend to push US lawmakers to fix the problem by insisting that a future legal framework require crypto firms keep customer assets walled off, the report said.
While separating customer and manager funds is a standard requirement among US financial firms, on the crypto side there is typically a commingling of funds. Coinbase said the Biden administration specifically wants to bring legislation that would standardize the practice between the two industries.
Coinbase added that US federal officials were expected to push in the coming weeks for a bill on the matter for Congress to consider, in line with the notion floated last year by the President’s Working Group on Financial Markets that companies that host crypto wallets need to be closely watched.
While the Biden administration wants crypto fund manager accounts to be held separately, it was of the opinion that customer funds should be pooled to allow managers to handle customer trades together and internally, instead of putting each transaction on an individual blockchain, Coinbase said.