U.S. President Joe Biden’s administration will pressure Congress to request a cryptocurrency exchange to keep client assets separate from institutional funds. CoinDesk writes about this, citing a knowledgeable source.

The addressee of the publication explained that the White House used the latest Form 10-Q report submitted by Coinbase to the US Securities and Exchange Commission (SEC) as an argument. According to the document, the money of the company’s customers can be blocked if it declares bankruptcy.

“Since digital assets held in custody can be considered the property of a bankruptcy, cryptocurrencies that we hold on behalf of our clients in the event of a bankruptcy may be subject to bankruptcy proceedings. According to the report, such clients can be considered our main unsecured creditors.

After the collapse of the company, “unsecured creditors” often lose all their assets, as they are in last place to reimburse the funds.

Coinbase president Brian Armstrong emphasized that the exchange is not in danger of bankruptcy and that customer funds are safe. According to him, this item was added to the report due to the new requirements of the regulator.

“We have no risk of bankruptcy, but we have added a new risk factor based on the SEC requirement called SAB 121. This is a new disclosure obligation for publicly traded companies with third-party digital assets,” he wrote.

The requirement to separate corporate and client funds is standard for traditional companies in the US. Securities market participants often pool these funds together, but the industry itself is more tightly regulated.

Recall that in March 2022, Biden issued an executive order instructing federal agencies to coordinate efforts to regulate the cryptocurrency industry.