In a July 24 article posted by the FinOps Report, Denver partner Richard B. Levin, who is chair of the firm's FinTech and Regulation Practice, was quoted after providing his thoughts on the Securities and Exchange Commission's newly proposed changes to its custody rule. 

In its letter to the SEC, Securitize, which operates a trading digital asset platform registered as a broker-dealer and a registered transfer agent, said it wants the SEC to include registered transfer agents in the category of qualified custodians. As long as the transfer agent meets the definition of “possession and control,” wrote Securitize CEO Carlos Domingo and general counsel Tom Eidt, digital assets on permissionless or public blockchains should be considered privately held assets the same way digital assets on permissioned blockchains are.

“The SEC’s distinction between permissioned and permissionless blockchains is flawed,” Levin told FinOps Report. “The SEC should be more concerned about whether a blockchain-based platform is registered with the SEC and has suitable cybersecurity measures.”

Permissionless blockchains can prevent some types of cyberattacks even better than permissioned blockchains and can reduce the likelihood of users manipulating the network, said Levin, who advised Securitize on its letter.