Staff in the U.S. Securities and Exchange Commission’s Division of Trading and Markets issued a statement on how paragraph (b)(1) of Exchange Act Rule 15c3-3 applies to crypto assets that are securities, indicating it will not object if a broker-dealer carrying crypto asset securities for customers deems itself to have “physical possession” when specified measures are taken. The statement is limited to paragraph (b)(1)’s physical possession concept and does not address other federal securities law obligations or the “control” prong; it also notes it is a staff view with no legal force or effect. The non-objection position is tied to safeguards including: having access to the crypto asset security and the ability to transfer it on the relevant distributed ledger; maintaining and enforcing written policies and procedures to assess and document the characteristics and governance of the distributed ledger technology and network before custodying the asset and at reasonable intervals thereafter; not treating the asset as possessed where the firm is aware of material security or operational problems or other material custody-related risks; protecting private keys with reasonably designed policies, procedures, and controls consistent with industry best practices so that no other person can transfer the asset without the broker-dealer’s authorization; and having arrangements that address disruptions (including blockchain malfunctions, 51% attacks, hard forks, and airdrops), enable compliance with lawful seizure or transfer-prevention orders, and support transfer of customer crypto asset securities in a wind-down or insolvency scenario. The Division framed the statement as an interim step in response to market participant requests while the Commission continues to consider broker-dealer custody issues and feedback received, and noted that the circumstances described are generally a subset of those in the Commission’s 2020 statement on custody of digital asset securities by special purpose broker-dealers.
U.S. Securities & Exchange Commission 2025-12-17
U.S. Securities and Exchange Commission staff sets conditions for broker-dealers to treat crypto asset securities as in possession under Rule 15c3-3
The U.S. SEC's Division of Trading and Markets clarified that broker-dealers can have "physical possession" of crypto asset securities under specific conditions. This non-objection stance includes safeguards like asset access, written policies on distributed ledger technology, and private key protection. The statement is an interim measure as the Commission evaluates broader custody issues and feedback.