According to the Wall Street Journal, citing the Harvard Law School Capital Markets Oversight Committee, the U.S. Securities and Exchange Commission (SEC) issued a Staff Accounting Bulletin in March requiring banks that custody crypto assets and their affiliated broker-dealers to include custody assets on their balance sheets. Or must bear responsibility for the user's losses in the FTX incident. This regulatory framework results in unregulated crypto trading platforms that can hold or “custody” crypto assets without banks and brokers keeping them, unable to prevent the misuse of funds and ensure that customers are able to recover all funds, resulting in users only becoming the trading platform to go bankrupt. Creditors may cause FTX users to lose billions of dollars.
In addition, documents on the official website of the U.S. Securities and Exchange Commission (SEC) show that at a meeting on March 23 this year, FTX General Counsel Ryne Miller and FTX US Policy and Regulatory Strategy Director Mark Wetjen, together with SBF, attended a meeting with two senior SEC officials to discuss "custody of digital asset securities by special purpose broker-dealers, including the unique risks associated with custody of digital asset securities." The meeting also discussed the possibility of not taking action, as long as these activities do not violate existing laws and follow other parameters set by regulators.