On Dec. 23, the U.S. Securities and Exchange Commission (SEC) has issued new guidance on the custody of digital asset securities.
Broker-dealers who hold security tokens will not be subject to enforcement action over a period of five years:
"The statement sets forth the Commission's position that, for a period of five years, a broker-dealer operating under the circumstances set forth in the statement will not be subject to a Commission enforcement action on the basis that the broker-dealer deems itself to have obtained and maintained physical possession or control of customer fully paid and excess margin digital asset securities for the purposes of paragraph (b)(1) of Rule 15c3-3."
They will have to follow a set of rules outlined in the agency's statement:
"These circumstances, among other things, include that the broker-dealer limits its business to digital asset securities, establishes and implements policies and procedures reasonably designed to mitigate the risks associated with conducting a business in digital asset securities, and provides customers with certain disclosures regarding the risks of engaging in transactions involving digital asset securities."
In her tweet, “Crypto Mom” Hester Peirce characterized the move as “baby steps.”
The industry has long been clamoring for more clarity when it comes to handling digital assets that are deemed securities. On Dec. 9, a few U.S. lawmakers also signed a letter to outgoing SEC Chairman Jay Clayton regarding the custody of security tokens:
"In the absence of guidance from the SEC, FINRA has not outright denied any brokerdealer applications that involve the custody of digital securities, which would render the applications eligible for appeal."
The SEC has set a 60-day comment period on this issue:
"In addition, the Commission is requesting comment to provide the Commission and its staff with an opportunity to gain additional insight into the evolving standards and best practices with respect to custody of digital asset securities. Such insights will serve to inform any potential future Commission action in this space."