1. Home
  2. custody


Coinbase met with Australian banking regulators over local crypto regulations

Coinbase's vice president of international policy told Cointelegraph the meetings took place in Canberra and Sydney and touched on the government’s token mapping efforts.

The Reserve Bank of Australia (RBA) and Treasury have been holding private meetings with executives from Coinbase, with discussions revolving around the future of crypto regulation in Australia.

Responding to Cointelegraph’s request for comment, an RBA spokesperson confirmed recent reports that these private meetings had occurred, stating that Coinbase met with the RBA’s Payments Policy and Financial Stability departments this week, “as part of the Bank’s ongoing liaison with industry.”

Tom Duff Gordon, Coinbase’s vice president of international policy who was reported to have been flown in for the meetings, also confirmed to Cointelegraph that meetings took place with Treasury in Canberra and Sydney.

Gordon said that the meetings touched on the government’s token mapping efforts, and Coinbase also “shared insights on global best practices concerning licensing and custody.”

The Australian Treasury's token mapping exercise was announced on Aug. 22, 2022, and is aimed at categorizing digital assets in a way to work them into existing regulatory frameworks.

A consultation paper was released by the Treasury on Feb. 3, for which the Treasury sought feedback from the crypto industry.

Gordon praised efforts from the Treasury, noting that “The Australian Treasury teams continue to impress us with their high level of sophistication and active involvement,” and adding:

“The Australian Treasury's token mapping exercise provides one of the most detailed and thoughtful papers we have encountered on the topic, setting a strong foundation for their forthcoming draft rules for crypto exchanges and custodians.”

Gordon expressed his desire to see the rules “later this year,” adding that he appreciated “the Treasury's comprehensive groundwork.”

In contrast, Coinbase’s co-founder and CEO Brian Armstrong has been critical of the approach to crypto regulation in the United States, echoing accusations that the Securities and Exchange Commission (SEC) is “regulating by enforcement” and claiming that the SEC wants firms to register with them despite there being no way to register.

Related: National Australia Bank makes first-ever cross-border stablecoin transaction

Documents recently obtained by the Australian Financial Review under freedom of information laws suggested that crypto legislation in Australia could be dragged out past 2024 and beyond, however, as final submissions to the cabinet are not expected until late in the year.

Coinbase expanded to Australia on Oct. 4, 2022, with Coinbase’s vice president of international and business development — Nana Murugesan — telling Cointelegraph at the time that it was “very impressed with the open door that we’ve received in Canberra and with different policymakers.”

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K

Celsius Custody customers finally begin withdrawals 263 days after freeze

Celsius users with funds held in its custody program have finally begun to withdraw funds, but users report delays due to a backlog of requests.

Some Celsius customers have reported being able to withdraw funds from the bankrupt crypto firm for the first time, some 263 days after the lender froze withdrawals in the lead-up to its bankruptcy filing.

According to numerous social media posts, as of Mar. 2, certain customers who held funds in Celsius’ Custody accounts have been overjoyed that they were finally able to withdraw their funds from the lender.

Customers report they received an email a few weeks ago listing those who were eligible to remove their funds, before receiving another on Mar. 2 noting withdrawals could be processed.

An email sent from Celsius to eligible customers on Mar. 2. Source: Twitter

While some users who whitelisted wallets ahead of their withdrawal attempt received their funds within minutes, others pointed to large delays.

Celsius customers discussing withdrawal processing times on Reddit. Source: Reddit

A backlog of withdrawal attempts seems to have built up, however, with some claiming that withdrawal requests are being converted into support tickets which could take some days to process, as a result of “too many requests and not enough staff.”

A Reddit user claimed they were told their request could take days to process. Source: Reddit

On Jan. 31, Celsius published details on who was eligible to withdraw, with customers who had only ever held funds in custody accounts able to currently withdraw 94% of their original funds.

The custody accounts were only available to United States residents. The withdrawals are restricted to these customers much to the disappointment of customers with funds in other accounts offered by Celsius.

Related: Wrapped Bitcoin supply drops to negative after 11,500 wBTC burn linked to Celsius

Custody account holders may yet be able to get back the other 6%, pending future court hearings.

Customers who had transferred funds from the earn or borrow programs to a custody account are apparently able to withdraw 72.5% of their funds at this point in time, up to a maximum of $7,575.

The lender had first announced they would be freezing withdrawals on Jun. 13, 2022, citing “extreme market conditions,” before filing for bankruptcy on Jul. 13.

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K

Galaxy acquires institutional crypto custody firm for $44M

Galaxy Digital invests $44 million to acquire institutional cryptocurrency custody platform GK8.

Galaxy Digital has invested $44 million into an institutional cryptocurrency custody platform to tap into its proprietary asset storage and management capabilities.

Mike Novogratz’s cryptocurrency investment firm has completed the acquisition of GK8, which has developed its own patent cryptocurrency custody technology aimed at giving secure asset management for institutional users.

The service specializes in providing cold vault technology that allows the execution of transactions without internet connectivity. Its in-house multi-party computation (MPC) vault provides the ability to automate transactions, and the service also provides access to Decentralized Finance (DeFi) networks, tokenization, NFT and trading.

A statement from Novogratz highlighted increased investor demand for custody services as a key reason behind the acquisition. GK8’s cold storage solutions and wallet technology will be onboarded into Galaxy Digital’s upcoming prime brokerage platform GalaxyOne.

The business deal will see Galaxy add an office in Tel Aviv to its organization, with nearly 40 GK8 employees becoming part of the wider group. GK8 founders Lior Lamesh and Shahar Shamai stay on through the acquisition to lead Galaxy’s custodial technologies offering.

Related: Mike Novogratz calls Helios a ‘transformative acquisition’ for Galaxy

GalaxyOne is touted to offer a broad range of cryptocurrency financial services to institutional-grade users on its launch. This will include trading, lending, derivatives, cross-portfolio margining as well as custodial offerings managed by GK8.

Galaxy doubled down on its investments into the cryptocurrency mining sector in December 2022, announcing a $65 million acquisition of Argo Blockchain’s main mining operation. The mining firm had to sell off its Helios mining facility to avoid bankruptcy during a tough year for the sector. 

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K

SEC proposes tougher rules as part of its crypto custody crackdown

The new proposals set forth by the Gensler-led SEC seek to “expand the scope” of rules set out by the 2009 Custody Rules.

A five-member panel of the United States Securities Exchange Commission (SEC) has voted 4-1 in favor of a proposal that may make it more difficult for cryptocurrency firms to serve as digital asset custodians in the future.

The proposal, which is yet to be officially approved by the SEC, recommends amendments to the “2009 Custody Rule” will apply to custodians of “all assets” including cryptocurrencies, according to a Feb. 15 statement from SEC Chairman Gary Gensler.

Gensler stated that currently, some crypto trading platforms that are offering custody services are not actual “qualified custodians.”

According to the SEC, a qualified custodian is generally a federal or state-chartered bank or savings association, trust company, a registered broker-dealer, a registered futures commission merchant, or a foreign financial institution.

In order to become a “qualified custodian” under the newly proposed rules, U.S. and offshore firms would additionally need to ensure that all custodied assets — including cryptocurrencies — are properly segregated, while these custodians will be required to jump through additional hoops such as annual audits from public accountants, among other transparency measures.

While Gensler said these amendments would “expand the scope” to all asset classes, he specifically took a shot at the crypto industry:

“Make no mistake: Today’s rule, the 2009 rule, covers a significant amount of crypto assets. [...] Further, though some crypto trading and lending platforms may claim to custody investors’ crypto, that does not mean they are qualified custodians. Rather than properly segregating investors’ crypto, these platforms have commingled those assets with their own crypto or other investors’ crypto.”

“When these platforms go bankrupt—something we’ve seen time and again recently—investors’ assets often have become property of the failed company, leaving investors in line at the bankruptcy court,” the SEC Chairman added.

Gensler also pointed to the industry's track record to suggest that few crypto firms would be reliable enough to serve as qualified custodians:

“Make no mistake: Based upon how crypto platforms generally operate, investment advisers cannot rely on them as qualified custodians.”

However, not every SEC member is on board with Gensler’s plans.

Commissioner Hester Peirce’s statement in response to the proposed rule changes on investment adviser custody set out by SEC Chairman Gary Gensler. Source: SEC.

While the proposal isn’t “regulation by enforcement” per se, Commissioner Hester Peirce said “the latest SEC statement seems designed for immediate effect” to take down the crypto industry:

“Such sweeping statements in a rule proposal seem designed for immediate effect, a function proposing releases should not play. These statements encourage investment advisers to back away immediately from advising their clients with respect to crypto.”

As for the proposal itself, Peirce believes it would do more harm than good.

She explained that such stringent measures will force investors to remove their assets from entities that have developed sufficient safeguarding procedures to mitigate and prevent fraud and theft:

“The proposal would expand the reach of the custody requirements to crypto assets while likely shrinking the ranks of qualified crypto custodians. By insisting on an asset neutral approach to custody we could leave investors in crypto assets more vulnerable to theft or fraud, not less.”

As for the next steps, Peirce noted the agency will soon schedule in a 60-day comment period once the proposal has been published in the Federal Register.

Related: US lawmakers and experts debate SEC’s role in crypto regulation

However, the commissioner is concerned that this timeframe isn’t sufficient to allow the public to analyze all aspects of the proposal.

Those who voted in favor of the proposal are hoping to implement the new rules within 12-18 months, according to Peirce, adding that it was an "aggressive timeline" given the changes being proposed

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K

US securities regulator probes Wall Street over crypto custody: Report

The regulator has been probing registered investment advisors over how they've been offering crypto custody to their clients, according to sources.

The United States Securities and Exchange Commission (SEC) has been probing traditional Wall Street investment advisors that may be offering digital asset custody to its clients without the proper qualifications.

A Jan. 26 Reuters report citing “three sources with knowledge of the inquiry” said the SEC’s investigation has been going on for several months already but accelerated after the collapse of crypto exchange FTX.

The investigations by the SEC have not been known previously before as the agency’s inquiries are not public, said the sources.

As per the Reuters report, much of the SEC’s efforts in this inquiry are looking into whether registered investment advisors have met the rules and regulations around the custody of client crypto assets.

By law, investment advisory firms must be “qualified” to offer custody services to clients in addition to complying with custodial safeguards set out in the Investment Advisers Act of 1940.

Cointelegraph reached out to the SEC to seek clarity on the matter but did not receive an immediate response.

The recent revelation suggests the SEC hasn’t turned a blind eye to traditional investment firms in the digital asset space, Anthony Tu-Sekine said, who leads Seward and Kissel's Blockchain and Cryptocurrency Group in a note to Reuters:

“This is an obvious compliance issue for investment advisers. If you have custody of client assets that are securities, then you need to custody those with one of these qualified custodians.”

"I think it's an easy call for the SEC to make,” he added.

Related: Senator Warren proposes reducing Wall Street’s involvement in crypto

On Nov. 15, the Wall Street Blockchain Alliance (WSBA) wrote a letter to the SEC to seek clarity on what potential amendments, if any, apply to the “Custody Rule” as it pertains to digital assets.

A letter written to the SEC by six members of the WSBA seeking regulatory clarity over digital asset custodial rules. Source: SEC.

Cointelegraph has reached out to the WSBA to ascertain whether they have received a response from the SEC.

Meanwhile, the securities regulator has continued to beef up its crypto enforcement efforts over the year. In May 2022, it increased its “Crypto Assets and Cyber Unit” team by nearly 100%.

It’s also kept busy dealing with the ongoing lawsuit against Ripple Labs, actions relating to FTX’s collapse and its founder Sam Bankman-Fried, among many more.

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K

Wrapped Bitcoin Project Sees 18% Redemption of Circulating Supply in 54 Days

Wrapped Bitcoin Project Sees 18% Redemption of Circulating Supply in 54 DaysStatistics show over the course of 54 days, the number of wrapped bitcoin (WBTC) hosted on the Ethereum network has decreased by 40,156. This equates to a more than 18% redemption of the circulating supply of WBTC since Nov. 27, 2022. WBTC Remains Largest Operation in Terms of Bitcoin Custody Despite Recent Redemptions The […]

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K

Celsius wants to extend the deadline for claims as lawyer fees mount

Administrative expenses from the bankruptcy proceedings have already topped $53 million, and continued delays are chipping away at Celsius’ estate.

Bankrupt crypto lender Celsius Network is planning to file a motion that would extend the deadline for users to submit their claims by another month.

The crypto community has started to grow impatient, noting that Celsius’ lawyer fees have continued to stack up and are eating away at the lender's estate.

In a Dec. 29 tweet, Celsius announced that it would seek to extend the current deadline for claims from Jan. 3 to early February. 

The bankruptcy court is set to hear the motion on Jan. 10, and according to Celsius, the Jan. 3 deadline will be extended until at least then.

The claims process allows creditors who believe they have a right to payment to file claims during bankruptcy proceedings. Celsius’ creditors had made over 17,200 claims as of Dec. 29.

However, Celsius’ creditors appear antsy as Celsius’ administrative fees have continued to rack up since it first filed for bankruptcy in July. A Dec. 27 Financial Times report noted that the fees charged by bankers, lawyers and other advisers in the bankruptcy case had already reached $53 million.

As an example, a Dec. 15 fee statement from one of the law firms representing Celsius, Kirkland & Ellis, requested a fee of over $9 million for work done during the months of September and October.

In comparison, only $44 million has so far been earmarked by Celsius to be returned to customers. This money belongs to users who only ever held funds within the Custody Program, and represents a minority of the $4.72 billion of user deposits held by Celsius.

Some in the crypto community have been unimpressed with the latest postponement in the proceedings, alleging that it’s yet another “delay tactic.” For example, one user noted “Stop wasting time stop extending, just go on with proceedings and give me my money back!!!!” while another simply said: “Stop wasting time and my money.”

Related: 7 biggest crypto collapses of 2022 the industry would like to forget

Global investment platform BnkToTheFuture founder Simon Dixon, who has been an active voice in the Celsius bankruptcy proceedings, noted in a Dec. 23 tweet that by the time users are able to get their funds back from Celsius, they should only expect around to receive around hal what they put in.

At the behest of Celsius, the U.S. trustee, and the unsecured creditors’ committee, judge Martin Glenn appointed fellow judge Christopher Sontchi to be a “fee examiner” on Oct. 20. His job is to negotiate and approve the fees set by lawyers and other professionals in the case.

The fee examiner is also being paid out of Celsius’ estate, with the latest fee statement submitted on Dec. 21 requesting just under $20,000 for work done during November.

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K

Celsius amasses 30 potential bidders for its assets, withdrawal motion approved

The bankrupt lender is set to hold auctions for its assets in January, while it's been given the green light to return some customer funds.

Bankrupt crypto lender Celsius Network has attracted 30 potential bidders over its various assets including its retail platform and mining business.

According to a company presentation filed on Dec. 20, more than 125 parties were contacted since September, with 30 potential bidders executing non-disclosure agreements — a legal contract used to protect sensitive information about a company or the bidding terms — typically required during negotiations.

Celsius said that so far, it has received multiple bids proposing a variety of potential transaction and business structures to acquire its assets — such as migrating Celsius customers to the acquirer’s platform along with a haircut of their assets — among other structures.

The lending platform also revealed it had received a number of single asset bids.

With the bidding deadline reached on Dec. 12, the auction for Celsius' various assets is now set for Jan. 10, 2023, after being pushed back from the original date of Dec. 15, according to earlier documents filed by Celsius.

Amended dates for bidding procedures as per Celsius court filings on Dec. 15. Source: Stretto

The latest presentation notes that as of Nov. 25 the company held coins valued at approximately $2.6 billion, but after this is combined with the value of its non-coin assets they are still $1.2 billion short of being able to pay off all debts.

Its ongoing mining operations have been successful however, with Celsius claiming that it has generated positive operating cash flow every month this year as it continues to deploy more mining rigs.

Related: BlockFi files motion to return frozen crypto to wallet users

In related news, on Dec. 20 bankruptcy judge Martin Glenn has just granted a motion previously filed by Celsius on Sep. 1, allowing them to reopen withdrawals for a minority of their customers.

The assets eligible to be withdrawn are those that were only ever held in the Custody Program and for amounts less than $7,575 which were transferred from Earn or Borrow Programs into the Custody program within 90 days of its filing for bankruptcy on Jul. 13.

The order also applies to "ineligible Withhold Assets," with assets included in this definition to be determined following meetings between Celsius, the Withhold Ad Hoc Group and the Celsius Official Committee of Unsecured Creditors.

Investors shelter in short-term Treasuries, reducing Bitcoin’s chance of rallying to $30K