SEC Issues Investor Guide on Crypto Wallets and Custody Risks

Source: CryptoNewsNet Original Title: SEC issues investor guide on crypto wallets and custody risks Original Link:

SEC Releases Investor Bulletin on Crypto Wallet Security and Custody

The United States Securities and Exchange Commission (SEC) has published an official investor bulletin serving as a guide for crypto wallets and custody. The commission outlines suitable practices and common risks associated with various cryptocurrency storage methods.

The bulletin compares self-custody with third-party custodian services, highlighting the merits and demerits of each approach. For investors using third-party custodians, the SEC recommends becoming familiar with custodian policies, particularly regarding whether assets may be rehypothecated (lent out) or stored in individual accounts versus pooled arrangements.

Hot Wallets vs. Cold Wallets

The guide discusses different types of crypto wallets and their risk profiles:

• Hot Wallets: Connected to the internet, exposing investors to hacking and cybersecurity threats
• Cold Wallets: Offline storage solutions that carry risks of irreversible loss if private keys are compromised or devices are stolen

Industry Response

Analysts noted this bulletin represents a significant shift in the SEC’s regulatory outlook toward digital assets. The guide has sparked positive reactions within the crypto industry, with many viewing it as a protective measure for investors. Industry observers noted the contrast with previous regulatory resistance, stating the agency is now providing educational guidance on cryptocurrency usage.

DTCC Receives Approval to Tokenize Financial Assets

In related developments, the Depository Trust and Clearing Corporation (DTCC) has received SEC approval to tokenize financial assets. The SEC issued a “no-action” letter permitting the DTCC’s subsidiary, the Depository Trust Company (DTC), to launch a new service converting real-world assets into tokens within a controlled production environment.

Initial tokenization efforts will focus on highly liquid assets, including:

• Russell 1000 index securities
• Major index-tracking exchange-traded funds
• US Treasury bills, bonds, and notes

The service is expected to become available to users in the second half of 2026, marking a significant step toward mainstream adoption of tokenized securities.