SEC Releases Cryptocurrency Custody Guide Detailing Best Practices

On December 14, the U.S. Securities and Exchange Commission (SEC) released a cryptocurrency custody guide outlining best practices and risks associated with various crypto storage methods.

This guide provides critical insights for investors, impacting crypto custody practices and highlighting potential policy shifts under SEC Chair Paul Atkins’ leadership.

SEC’s Guidance Reshapes Cryptocurrency Custody Practices

The U.S. Securities and Exchange Commission (SEC) has released a detailed guideline concerning the custody of cryptocurrencies, marking a notable shift under Paul Atkins’ leadership. This guide outlines best practices, emphasizing self-custody as opposed to third-party custodianship, distinguishing most crypto assets from securities.

Custodians must adhere to strict protocols, particularly in asset management. Asset segregation, ensuring cryptocurrencies aren’t re-hypothecated, is underscored. Cold and hot wallet risks are differentiated, highlighting hacking vulnerabilities and offline storage failures.

As Jake Claver, CEO of Digital Ascension Group, commented on the guide’s impact: “SEC is providing ‘huge value’ to crypto investors by educating prospective crypto holders about custody and best practices.”

Potential Investor Confidence Boost Amid Regulatory Clarity

Did you know? The SEC’s focus on asset segregation mirrors previous NYDFS guidelines, which also underscored limiting the use of customer assets.

Ethereum’s recent trading data from CoinMarketCap shows a price of $3,120.80, with a market cap standing at 376.67 billion dollars. It has seen a 24-hour trading volume of 9.94 billion dollars, reflecting a decline of 58.47%. Over the past 30 days, its price has decreased by 2.61%.

According to the Coincu research team, the SEC’s guidelines may promote increased safeguards for digital assets, potentially attracting new investors. The focus on custody protocols aligns with long-term regulatory trends aimed at bolstering market integrity. Such measures could influence broader cryptocurrency market practices.