SEC, FINRA Offer Clarification on Custody of Digital Asset Securities

SEC and FINRA have stated that entities looking to participate in digital asset marketplaces must comply with existing securities laws ..

Arslan Butt•Tuesday, July 9, 2019•1 min read

In the US, SEC and FINRA are exploring regulatory compliance issues for broker-dealer custody of digital asset securities. In a joint announcement published on Monday, both agencies have stated that entities looking to participate in digital asset marketplaces must comply with existing securities laws in place.

This latest statement has come in response to market participants requesting clarification on whether federal laws would apply to the issue of custody with regards to digital asset securities. In its statement, the SEC remarks, “The requirements of the Customer Protection Rule have produced a nearly fifty year track record of recovery for investors when their broker-dealers have failed.”

Existing federal laws require the existence of a custodian to take physical possession of a security – something that the decentralized and virtualized world of digital asset securities eliminate.

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Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.