Speaking before the Investor Advisory Committee, SEC Chair Gary Gensler said current custody rules do not adequately safeguard users’ crypto assets.

Gensler said existing custody rules are supposed to safeguard investors’ crypto funds and securities with qualified custodians. However, crypto exchanges that currently fulfill that role are not qualified custodians, in his view.

“Based upon how crypto trading and lending platforms generally operate, investment advisers cannot rely on them today as qualified custodians.”

Without naming specific cases, Gensler pointed out that recent times have seen a spate of exchange failings that have left users hung out to dry at bankruptcy court.

He recommended safeguarding rules take account of “important enhancements,” ensuring only qualified custodians be allowed to hold users’ crypto assets.