Anonymous Bitcoin Investor Pitches Custody Safeguards to SEC and CFTC

**Headline:** Anonymous Bitcoin Investor Pitches Custody Safeguards to SEC and CFTC

**Summary:** An unnamed Bitcoin investor has filed a memo with the SEC's Crypto Task Force urging reserve, segregation and consent rules for crypto custodians. The pitch lands while the CFTC's comment window on digital-asset market oversight stays open through Dec. 14. It's a proposal to examine, not policy — the author line doesn't even have a name yet.

Somebody holding Bitcoin is done trusting custodians blindly. An unidentified investor sent a written submission dated Nov. 5 to the SEC's Crypto Task Force, asking regulators to build reserve, segregation and consent guardrails for firms that hold crypto for clients, according to tokenpost.com. The memo is a pitch, not a rule, and its author line still carries placeholders for a name and contact information.

The central ask: any custodian with withdrawable Bitcoin balances should hold enough unencumbered BTC to cover customer entitlements. Customer assets would be legally separated from the firm's own, with defined treatment of those holdings if a custodian goes insolvent. Independent checks would stretch across wallet control, asset ownership, customer liabilities, liens, related-party balances and material off-chain obligations.

Verification gets two layers. The investor wants financial-statement audits where they apply, paired with more frequent cryptographic attestations and reconciliation controls. That's a jab at proof-of-reserves reports, which the submission notes are not the same thing as audits and may not show a company's full liabilities.

For custody-only accounts, the demand is specific, informed and revocable customer consent before a provider lends, pledges or rehypothecates Bitcoin. Custody services should be labeled separately from yield-bearing and lending products, the memo says, so customers know whether their coins sit in safekeeping or are available for someone else's use. It also raises whether providers use deposited crypto as collateral or commingle it without permission and consent clarification for whether assets are safekeeping or available for use by a custodian or third party, or if customer consent is required. The submission asks regulators to examine a locate-and-borrow requirement for spot Bitcoin short sales and weigh extra disclosure and oversight for leveraged derivatives, naming open interest, liquidation mechanisms and funding-rate methods as possible disclosure topics. It separates custody balances, which may represent a claim to Bitcoin, from cash-settled futures, which give price exposure without ownership. A borrowing rule for futures short sellers should be looked at on its own track, with a cost-benefit review, according to the memo. The investor wrote, 'This is a proposed rule for examination, not a description of existing universal Bitcoin-market law.' The document doesn't claim illegal naked short selling is widespread, and it doesn't argue derivatives have dragged Bitcoin's price down over the long haul. The clock is ticking on the wider process: the CFTC issued an advance notice of proposed rulemaking on Oct. 13 seeking public comment on crypto-asset markets, covering exchange custody, proof-of-reserves practices, leverage and rehypothecation. That notice is a request for input, not a final rule. Comments are due Dec. 14, and the investor's recommendations carry no agency weight.