The United States Securities and Exchange Commission (SEC) is planning to propose new rules that would make it more difficult for cryptocurrency firms to become qualified custodians for institutional fund managers. This proposal would affect hedge funds, private equity firms, some venture capital firms, and pension funds, as they are required to secure clients’ assets with qualified custodians. The SEC is taking an aggressive stance against the crypto sector after a long list of firms met their demise last year, dragging investors’ funds alongside. The agency has already taken action against crypto lenders Nexo and BlockFi, insisting that most crypto tokens and offerings are classified as securities and should be registered to ensure proper oversight and disclosures. The proposed rule changes will require the SEC to receive feedback from the public, vote on the proposal, and finalize the rule before it takes effect. This move is intended to reduce the risks that crypto might pose to the broader financial system and protect investors from potential fraud and mismanagement.