- The SEC is working toward clearer rules for crypto custody involving investment advisers and regulated funds.
- Self-custody could potentially be permitted under specific conditions within the proposed framework.
- RAY, ENA, CRV, VET, and INJ represent different areas of the broader crypto market.
The U.S. Securities and Exchange Commission is moving toward clearer crypto custody rules, potentially making it easier for regulated financial firms to hold digital assets. For years, crypto custody has remained difficult to fit within traditional financial rules. That could change as the SEC works toward a framework covering how investment advisers and regulated funds can safeguard digital assets.
However, the implications of the possible changes are significant as custody is one of the major operational pain points for institutions entering the crypto market. Some of the uncertainty involved in institutional participation could be lessened with a more clearly established structure. But that doesn’t necessarily mean that a finalised custody rule is already in place. The SEC still has to go through its formal regulatory process and the final framework could include specific requirements for firms and custodians.
Raydium (RAY) and Decentralized Trading
Raydium is a decentralized exchange protocol on Solana. It offers token swaps and liquidity throughout the network, and introduces RAY to the decentralized trading market. However, if regulated institutions obtain access to digital assets, trading platforms could be more prominent. RAY’s activity remains to be confined to the Solana ecosystem.
Ethena (ENA) and On-Chain Dollar Markets
Ethena is a decentralized finance protocol focused on USDe, which is a synthetic dollar with a USD-denominated value that is achieved by the use of crypto-based mechanisms. ENA is the governance token of the protocol. It is directly exposed to stablecoins, on-chain liquidity and crypto financial products, due to its location in decentralized finance.
Curve DAO (CRV) Focuses on Stablecoin Liquidity
Curve is a decentralised exchange protocol focused on stablecoins and other assets of similar value. It has a well-developed infrastructure that is utilized in decentralized finance for liquidity provision and trading tokens. The governance token of the protocol is CRV. The increased activity in regulated and decentralized markets may have kept liquidity infrastructure for on-chain finance in the spotlight.More activity in regulated and decentralized markets might have maintained the spotlight on liquidity infrastructure in the on-chain finance space.
VeChain (VET) Targets Business Applications
VeChain is interested in blockchain applications that include supply chain, business data and asset tracking applications. It has a network built to offer infrastructure for blockchain-based information recording and verification to organizations. VET is thus a different part of the digital asset market, and its application more focused on enterprise blockchain solutions.
Injective (INJ) Builds Financial Infrastructure
Injective is a blockchain tailored for finance apps, such as decentralized trading and derivatives. It has a network that offers infrastructure for developers creating financial products on-chain. The network’s native token and is tied to activity throughout the Injective ecosystem is INJ.
What Comes Next for Crypto Custody
The SEC’s custody role adds to the ongoing efforts of U.S. regulators to develop digital asset custody regulations and bring digital assets into the mainstream of traditional finance. One of the operational issues investment advisers and regulated funds are grappling with could be solved by a more explicit custody arrangement. The effects of these impacts on RAY, ENA, CRV, VET, and INJ would be contingent on a larger institutional involvement, market conditions, and the actual regulatory design.
