According to ME News, on December 18 (UTC+8), the U.S. Securities and Exchange Commission's (SEC) Division of Trading and Markets issued a statement regarding broker-dealers holding crypto-asset securities. This statement clarifies the applicability of Rule 15c3-3(b)(1) of the Securities Exchange Act to crypto-assets as securities (i.e., "crypto-asset securities"), and applies to broker-dealers holding such assets on behalf of clients. The statement indicates that the SEC will not object to a broker-dealer's determination that it has physical possession or control of crypto-asset securities in a client's account if the broker-dealer takes the following actions:
1. Access and transfer capabilities: The ability to directly access encrypted asset securities and transfer such assets on the relevant distributed ledger;
2. Technology Risk Assessment: Establish and implement well-designed written policies and procedures to assess the characteristics and risks of distributed ledger technology and related networks used to record asset ownership;
3. Risk Mitigation: If a party is aware of significant security or operational issues or weaknesses in the relevant distributed ledger technology, or if hosting the asset would pose other significant risks to its business, it shall not claim possession of the asset.
4. Private Key Protection: Establish policies, procedures, and internal controls that conform to industry best practices to prevent the theft, loss, or unauthorized use of private keys required to access and transfer assets, and ensure that no one other than the broker-dealer (including clients or third parties) can access private keys or transfer assets.
5. Contingency Plan: Develop well-designed written policies, procedures, and arrangements to ensure the continued secure preservation and transfer of crypto-asset securities in the event of blockchain failures, 51% attacks, hard forks, or in the event of liquidation or bankruptcy of the brokerage firm. (Source: ME)
