It’s the brokers’ turn for crypto clarity in the US Securities and Exchange Commission’s series of staff statements that were supposed to reveal their current thinking on how to treat the digital asset space, in this case touching on brokers’ “physical possession” of assets and separately asking some questions about so-called alternative trading systems (ATSs) for crypto.
One of the two latest releases this week deals with custody of clients’ crypto securities at regulated broker-dealers, advising firms on how to properly hold those assets, including protecting clients’ private keys. As long as they follow the informal standards set forth in the statement, broker-dealers won’t get a knock on their door from the SEC.
Their approach must also anticipate “blockchain failures, 51% attacks, hard forks or airdrops,” according to the statement from the SEC’s Division of Trading and Markets.
The agency’s advice can help traditional trading companies find additional comfort in their handling of crypto assets. It will include tokenized stocks and debt securities, although the specific definition of a crypto security has not yet been fully established.
The SEC’s series of crypto statements have been welcomed with open arms by the industry, but they don’t have rulemaking or guidance authority, so they would be easy to reverse if the agency’s leadership were to change hands.
Also this week, the US securities regulator issued a “frequently asked questions” document that delves into activity at crypto ATS. As pointed out by Commissioner Hester Peirce, who heads the agency’s crypto task force, the questions focus heavily on trading and settlement.
“Trading platforms and market participants must be able to operate under the security of clear market structure rules that facilitate fair and orderly markets without imposing unnecessary burdens,” Peirce said in a statement.
Read more: US SEC chief Atkins says clarity coming on crypto tied to investment contracts
