SEC Issues FAQs on Broker-Dealer Crypto Asset Activities, Transfer Agent Blockchain Use

The Staff of the Division of Trading and Markets of the US Securities and Exchange Commission issued on May 15, 2025 responses to Frequently Asked Questions Relating to Crypto Asset Activities and Distributed Ledger Technology. The FAQs provide guidance on crypto asset custody by broker-dealers and transfer agents’ use of the blockchain to maintain Master Securityholder Files.

Simultaneously, the Staff and the Office of General Counsel of the Financial Industry Regulatory Authority, Inc. (FINRA) announced the withdrawal, effective immediately, of a joint statement (the Joint Staff Statement) issued by the staffs in July 2019 regarding broker-dealer custody of crypto assets.

The issuance of the FAQs and the withdrawal of the Joint Staff Statement are part of the SEC’s plan to provide clarity regarding the regulatory treatment of various crypto asset [1] activities. On May 19, SEC Chairman Paul Atkins gave remarks at the SEC Speaks Conference and stated that he has “directed Commission staff across [the SEC’s] policy Divisions to begin drafting rule proposals related to crypto, [and] the staff continue to ‘clear the brush’ through staff-level statements.”

The withdrawn Joint Staff Statement had previously outlined significant challenges and risks associated with broker-dealers custodying crypto asset securities, noting difficulties in complying with certain federal securities laws. The FAQs clarify the application of certain federal securities laws to crypto asset securities.

FAQS ON CRYPTO ASSET ACTIVITIES AND DISTRIBUTED LEDGER TECHNOLOGY

The FAQs provide guidance on crypto assets for broker-dealers and transfer agents. A summary of the Staff’s responses to certain frequently asked questions from the industry are as follows:

Broker-Dealer Financial Responsibility

• Paragraph (b) of Rule 15c3-3 under the Securities Exchange Act of 1934 (the Customer Protection Rule) does not apply to crypto assets that are not securities; it applies only to securities carried by a broker-dealer for customer accounts or proprietary accounts of other broker-dealers.
• A broker-dealer can establish control of a crypto asset that is a security as contemplated by paragraph (c) of the Customer Protection Rule, even if the asset is not in certificated form, as long as it is held at a qualifying control location.
• Compliance with the Commission’s 2020 Special Purpose Broker-Dealer (SPBD) Statement is not mandatory for broker-dealers seeking to custody customer crypto assets that are securities. The SPBD Statement provides a temporary safe harbor but does not amend the Customer Protection Rule.
• Broker-dealer custody and capital requirements do not prohibit facilitating in-kind creations and redemptions in connection with a spot crypto exchange-traded product (ETP), but proprietary positions in the assets underlying an ETP must be accounted for in a broker-dealer’s net capital calculations. For this purpose, a broker-dealer may treat a proprietary position in bitcoin or ether as being readily marketable for purposes of determining whether the 20% haircut applicable to commodities under Appendix B of Exchange Act Rule 15c3-1 applies.
• Crypto assets that are investment contracts are not treated as securities under the Securities Investor Protection Act of 1970 unless they are the subject of a registration statement filed under the Securities Act of 1933.
• The Securities Investor Protection Corporation (SIPC) does not protect customer claims for nonsecurity crypto assets held by an SIPC member broker-dealer.
• In an effort to ensure the return of nonsecurity crypto assets if a broker-dealer becomes insolvent, a broker-dealer may agree with customers to treat such assets as “financial assets” under Article 8 of the Uniform Commercial Code.
• In order to maintain adequate records, broker-dealers conducting nonsecurity crypto asset businesses should maintain records similar to those kept for securities activities to ensure investor protection and facilitate audits or examinations.

Transfer Agents

• A person acting as a transfer agent for an issuer of a crypto asset that is a security may be required to register with the SEC if they perform any of the five enumerated activities defined in Section 3(a)(25) of the Exchange Act [2] with respect to a security that is registered under Section 12 of the Exchange Act or which would be required to be registered except for the exemption from registration provided by Section 12(g)(2)(B) or Section 12(g)(2)(G) of the Exchange Act (i.e., certain securities issued by a registered investment company or an insurance company).
• A registered transfer agent may use distributed ledger technology as its official Master Securityholder File provided that it complies with all applicable federal securities laws and requirements. Transfer agents may maintain transaction information on a blockchain while keeping personal information off-chain so long as records are secure, accurate, up to date, and produceable to the Commission in an easily readable format.

At the end of the FAQs, the Staff encouraged industry to engage with the Staff, ask questions, and request assistance regarding the application of the Commission’s broker-dealer and transfer agent rules to crypto asset activities and distributed ledger technology.

SEC AND FINRA WITHDRAW JOINT STAFF STATEMENT

The same day that the FAQs were published, the Staff and FINRA announced the immediately effective withdrawal of the Joint Staff Statement issued by the staffs on July 8, 2019 regarding broker-dealer custody of crypto assets. The FAQs express a much more flexible approach to the custody of crypto assets than the Joint Staff Statement, which had cast significant doubt on the ability of a broker-dealer to custody crypto assets in accordance with the requirements of the Customer Protection and other rules.

CONCLUSION

The FAQs provide welcome clarity for broker-dealers and transfer agents on the application of various laws and rules to crypto asset securities. The issuance of the FAQs and withdrawal of the Joint Staff Statement follow statements made by the SEC Staff that it intends to move away from ad hoc enforcement and guidance and toward implementing a more formal, structured, and rational regulatory landscape for crypto assets.