U.S. SEC Issues Guidance on Crypto Asset Custody and ATS Activity
The U.S. Securities and Exchange Commission (SEC) has issued a staff statement providing guidance for regulated broker-dealers on the custody of customers' crypto assets. This guidance outlines how broker-dealers should properly possess digital assets and safeguard private keys. While the statement is non-binding and reflects current SEC thinking rather than formal rulemaking, it represents part of a series of staff statements intended to clarify agency expectations.
Broker-dealers are required to prepare for potential blockchain-related disruptions, including malfunctions, 51% attacks, hard forks, and airdrops, under this guidance. The scope could extend to tokenized stocks and debt securities, although a formal definition of crypto securities remains unsettled.
In addition to custody guidance, the SEC released a frequently asked questions (FAQ) document addressing activity at crypto-focused alternative trading systems (ATS), emphasizing trading and settlement concerns. Commissioner Hester Peirce, who leads the SEC's crypto task force, highlighted the need for clear market-structure rules to ensure fair and orderly operation without imposing unnecessary burdens.
These statements aim to reassure traditional trading firms about handling crypto assets. However, since the guidance does not have the authority of formal rulemaking, it could be reversed if there are changes in agency leadership.
