Blockchain Legal Resource

On May 15, 2025, the staff of the SEC’s Division of Trading and Markets issued new FAQs relating to crypto asset activities and distributed ledger technology. Additionally, the staffs of the Division of Trading and Markets and the Office of General Counsel of FINRA also withdrew their 2019 joint statement regarding broker-dealer custody of digital asset securities.

The new FAQs outline how SEC-registered broker-dealers can comply with the net capital and custody rules under SEC Rules 15c3-1 and 15c3-3, respectively, drawing a distinction between crypto assets that qualify as securities and those that do not. Key takeaways include:

1. Rule 15c3-3(b) on physical possession or control applies only to securities, not non-security crypto assets.
2. Broker-dealers may establish control over digital asset securities by complying with Rule 15c3-3(c), even if those assets are not in certificated form.
3. The SEC staff’s 2020 statement on custody of digital asset securities by special-purpose broker-dealers is not mandatory but instead offered a temporary safe harbor, and broker-dealers may also rely on control procedures under Rule 15c3-3(c).
4. For crypto exchange-traded products, in-kind creation and redemption is permitted, though proprietary positions in Bitcoin and Ether are potentially subject to haircuts under the net capital rule, Rule 15c3-1.
5. Only crypto securities registered with the SEC are protected under the Securities Investor Protection Act. Thus, non-security crypto assets, even if held at a SIPC-member broker-dealer, do not receive SIPC protection.
6. Transfer agents may use distributed ledge technology as an official “master securityholder file” under SEC Rule 17Ad-9(b).

Commissioner Peirce also issued a statement in support of the FAQS, noting that “these FAQs are incremental, not comprehensive” and that the SEC “staff and the Commission still have much more work to do.”