SEC Withdraws Statement On Broker Dealer Custody Of Digital Asset Securities
On May 15, 2025, the SEC Division of Trading and Markets and Office and FINRA’s Office of General Counsel withdrew their joint statement on broker dealer custody of digital asset securities. The original joint statement had been issued on July 8, 2019 (see HERE). This original statement has oft been thought of as the reason that broker dealers have not (could not) adopt any broad ranging policies or procedures related to digital assets.
The withdrawal of the joint statement, together with the slew of other recent activity from the SEC related to digital assets, (see HERE for example) is an important step towards more widespread adoption of digital asset trading, allowing retail investors to aggregate their investments with their trusted broker dealer advisors.
Refresher On Original Joint Statement/Concerns
Broker-dealers that hold funds and securities must comply with Exchange Act Rule 15c3-3 (the “Customer Protection Rule”), which generally requires the broker to maintain physical possession or control over
Digital Asset Securities – Progress For Broker Dealers
In December 2020, the SEC issued a statement and request for comment regarding the custody of digital asset securities by broker-dealers. The Statement and request for comment sets forth suggestions for complying with the Customer Protection Rule and lists certain requirements that a broker-dealer could comply with to ensure that it would not be subject to an enforcement proceeding for violation of the Customer Protection Rule.
Two months later, in February 2021, the SEC Division of Examinations issued a risk alert focused on digital asset securities. These statements were the first hitting head on the topic of digital asset custody since an August 2019 joint statement by the SEC and FINRA on the custody of digital assets (see HERE) and October 2019 joint statement by the SEC, FinCEN and the CFTC (see HERE).
The SEC and FINRA have been discussing issues of custody related to tokens and digital assets for years. For example, issues surrounding the custody
