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July 12, 2019

12 July 2019

Digital Asset Securities: Joint SEC and FINRA Statement Aimed at Broker-Dealer Custody

On July 8, 2019, the long-awaited statement (Statement) on custody of digital asset securities was released jointly by the staffs (Staffs) of the U.S. Securities and Exchange Commission (SEC) Division of Trading and Markets and the Financial Industry Regulatory Authority (FINRA).1  The Statement is based on industry discussions with the Staffs and highlights the following:

  1. Certain noncustodial broker-dealer models may have a path forward for FINRA approval.
  2. The Staffs have concerns relating to broker-dealer custody of digital asset securities that remain unanswered, but certain good control locations (i.e., banks, issuers and transfer agents) may provide a viable custody solution under the Customer Protection Rule.2
  3. Market participants should consider other broker-dealer requirements, including books and records and financial reporting rules.

(more…)

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