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SEC Provides Clarity on Broker-Dealer Custody of Crypto Asset Securities

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The U.S. Securities and Exchange Commission (SEC) outlined how broker-dealers can legally custody crypto asset securities under existing customer protection rules. The guidance, published on Dec. 17 by the staff of the Division of Trading and Markets, clarifies Rule 15c3-3, focusing on physical possession or control. It explains when a broker-dealer may consider itself in possession of a crypto asset security, such as having direct blockchain access and transfer capability. The statement also stresses documented assessments of blockchain characteristics and operational resilience, along with controls to protect private keys and manage on-chain data disruptions like 51% attacks or hard forks.
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