The U.S. Securities and Exchange Commission proposed a new rule on Wednesday that may back crypto companies further into a corner as regulators continue to crack down on the space.

The SEC voted 4-1 for a proposal that would direct registered investment advisers (RIAs) — like wealth managers or hedge funds — to keep customers’ money and securities with qualified custodians like a bank, broker-dealer or trust company when storing digital assets, mainly leaving crypto companies on the outskirts.

The proposal aims to keep customer assets segregated appropriately, so if an adviser or custodian files for bankruptcy or becomes insolvent, it could protect the users’ assets, the SEC stated.

“If there’s anything we should learn from the FTX collapse, it’s that assets should be stored until required for trading by external, qualified, regulated and insured custodians,” Mike Belshe, CEO of BitGo, told TechCrunch. “This creates a check and balance for verifying reserve assets under any exchange’s control.”

SEC’s proposal could affect which crypto companies can manage assets by Jacquelyn Melinek originally published on TechCrunch