US SEC Issues Guidelines for Broker-Dealer Control of Crypto Asset Securities
The SEC’s latest staff statement offers non-binding clarity on custody protocols, security measures, and contingency planning for broker-dealers managing blockchain-based securities and crypto trading systems.
The U.S. Securities and Exchange Commission has issued updated guidance for broker-dealers on handling client crypto asset securities, including tokenized stocks and bonds. The non-binding staff statement from the Division of Trading and Markets outlines measures for safeguarding private keys, contingency planning for blockchain malfunctions, 51% attacks, hard forks, and airdrops, and sets expectations for custody standards to avoid regulatory issues. The release also includes a separate FAQ on crypto alternative trading systems (ATS), addressing trading and settlement practices. Commissioner Hester Peirce, head of the agency’s crypto task force, emphasized the importance of clear market structure rules for fair and orderly markets without undue burden.
- Crypto Asset Securities: Digital representations of investment contracts or equities regulated under U.S. securities laws.
- Private Key: A unique cryptographic code used to authorize transactions and access a cryptocurrency or digital asset.
- Alternative Trading System (ATS): A non-exchange trading venue that matches buyers and sellers for securities, including certain crypto assets.