Overview
- Published December 12 by the SEC’s Office of Investor Education and Assistance, the bulletin explains custody basics, noting that wallets store private keys rather than the assets themselves.
- The guidance stresses that private keys and seed phrases are irreversible access mechanisms, so loss or compromise can permanently block access to funds.
- Investors weighing self-custody versus third-party custody are urged to consider use frequency, accessibility needs, and risk tolerance rather than assuming one model is inherently safer.
- For custodians, the SEC urges due diligence on regulatory oversight, storage practices, insurance, cybersecurity, privacy, fees, and policies on rehypothecation and commingling, warning that hacks, shutdowns, or bankruptcy can cut off access.
- The release coincides with a DTCC no‑action letter for a tokenization pilot (Dec. 11) and OCC conditional trust bank charters for Circle, Ripple, Paxos, BitGo, and Fidelity (Dec. 12), with trust charters not conferring deposit insurance.