SEC’s Crypto Custody Roundtable Begins Tomorrow, Here’s What You Should Know

The U.S. Securities and Exchange Commission will convene its second crypto policy roundtable on Friday, focusing on crypto asset custody rules and regulatory gaps.

The event is part of a four-part series launched by the SEC’s Crypto Task Force to gather input and discuss policy options around digital asset regulation.

Opening remarks will come from several senior SEC figures, including new Chairman Paul S. Atkins, who was sworn in earlier this week and has vowed to bring regulatory clarity to the crypto industry.

The roundtable will feature two panels: one on “Custody Through Broker-Dealers and Beyond” and the second on “Investment Adviser and Investment Company Custody.”

The question of how crypto assets should be custodied has emerged as a flashpoint in U.S. financial regulation. Under current SEC rules, investment advisers must hold client funds and digital assets with a qualified custodian, typically a bank or broker-dealer. 

But few firms are set up to meet these requirements when it comes to crypto assets, which often require the use of different technologies from traditional custodian services and 24/7 trading capabilities. 

A 2023 proposal by the SEC aimed to update these rules but has drawn criticism for lacking practical solutions for crypto-native firms.

Confirmed participants of the session include representatives from leading crypto and finance firms such as Fireblocks, Anchorage Digital Bank, Fidelity Digital Assets, Krake,n and BitGo. Legal and academic experts will also join the discussion.

Among them, several have previously been outspoken in their views on the current approach to crypto custody in the U.S.

Neel Maitra, a partner at Dechert LLP, previously called custody “the single greatest question facing crypto market participants,” citing the dual demands from investors for both access and secure storage.

Justin Browder of Simpson Thacher, another panelist, criticized the SEC’s stance last year as forcing advisers to choose between client needs and regulatory compliance. 

He noted, There are currently very few qualified custodians that are capable of providing solutions for crypto-assets.”

This session follows an earlier roundtable on crypto trading held on April 11. Two more sessions will follow, one on tokenization on May 12 and another on decentralized finance on June 6.

Edited by Sebastian Sinclair