The SEC has refreshed its crypto asset FAQs, clarifying how broker-dealers like Morgan Stanley, Goldman Sachs, and others can fulfill custody and capital necessities for crypto asset securities, and addressing how the framework applies to Bitcoin and Ethereum ETF exercise.
The replace seems on the Buying and selling and Markets FAQ index as “Ceaselessly Requested Questions Regarding Crypto Asset Actions and Distributed Ledger Expertise (Might 15, 2025) – UPDATED December 17, 2025.”
It provides companies a present staff-posted reference as custody design turns into a gating merchandise for tokenized securities distribution and ETP market-making.
How the SEC’s up to date custody steerage reshapes dealer management of crypto property
Within the FAQ textual content, employees reiterates that Rule 15c3-3(b) “possession or management” doesn’t apply to non-security crypto held by broker-dealers, protecting non-security crypto outdoors the Buyer Safety Rule mechanics that apply to securities custody.
For crypto asset securities, employees says a broker-dealer can set up “management” underneath Rule 15c3-3(c), even the place the instrument is just not certificated, by utilizing qualifying management areas.
Employees additionally says this method reduces reliance on the special-purpose broker-dealer (SPBD) protected harbor as the first route for demonstrating management over these securities.
The employees additionally says it could not object if broker-dealers facilitating in-kind creations and redemptions deal with proprietary positions in bitcoin or ether as “readily marketable” for internet capital functions.
That might apply the 20% commodity haircut underneath Rule 15c3-1 Appendix B when calculating deductions.
These employees positions now sit alongside a proper cleanup of prior messaging.
How the SEC’s withdrawal reframes “management” in crypto asset custody
The 2019 SEC and FINRA joint employees assertion on broker-dealer custody of digital asset securities is marked withdrawn on the SEC withdrawal web page, with a parallel discover posted by FINRA.
The withdrawal narrows the broker-dealer custody “north star” to the FAQ framework and its said use of present control-location ideas for crypto asset securities.
Essentially the most operationally delicate situation is what it takes, in follow, to fulfill the Rule 15c3-3(c) idea of “management” when securities are recorded on a blockchain.
The FAQ doesn’t say a broker-dealer should maintain personal keys, however 15c3-3(c) management is tied to safeguarding and directing the motion of buyer securities at a acknowledged management location.
For on-chain devices, that usually maps to who can signal or compel signing by means of the custody stack.
Examples embody broker-dealer-held key materials in an HSM, a financial institution management location the place the broker-dealer has documented directive rights, or a multisignature association the place the broker-dealer’s signatory authority and procedures are designed to fulfill control-location expectations.
Regulation-firm summaries have emphasised that the employees’s method expands the trail for normal broker-dealers to proof management with out leaning on SPBD standing because the default posture.
That shift will increase deal with contract language, key governance, and the audit path that demonstrates management over time, in response to Sullivan & Cromwell and Sidley Austin.
On ETP rails, the “readily marketable” posture for proprietary bitcoin and ether positions hyperlinks on to intraday stock economics for licensed contributors and market makers that help in-kind baskets.
A capital-efficiency sketch reveals the route: If an affiliated broker-dealer carries a mean intraday stock of $50 million in BTC or ETH to facilitate creations and redemptions, a 20% commodity haircut implies a internet capital deduction of about $10 million tied to that stock.
That arithmetic is just not a full internet capital mannequin, nevertheless it explains why some desks favor money workflows and why employees therapy could make in-kind operations extra workable for companies working on skinny spreads.
Financial institution partnerships can also face fewer procedural tripwires than in prior cycles
The Federal Reserve withdrew earlier supervisory letters on April 24, 2025, that had set advance-notice expectations for sure crypto-asset and greenback token actions, transferring financial institution engagement towards extra routine supervisory channels.
For broker-dealers counting on financial institution sub-custody as a control-location pathway, that shift issues as a result of it could shorten the trail from idea to a supervisory dialog on the financial institution aspect.
Dealer-dealers nonetheless must proof 15c3-3(c) management and data in a fashion examination groups can check.
Over the subsequent 12–18 months, the custody market might cluster round which constructions produce repeatable proof of management whereas containing cyber and operational publicity.
In broad phrases, the choice is commonly whether or not the broker-dealer straight controls key materials or proves directive management by means of a qualifying third-party management location.
Every possibility trades off governance burden, incident-response design, and examiner consolation.
| State of affairs (12–18 months) | The place management sits (signing or directive authority) | Major operational profit | Predominant execution danger |
|---|---|---|---|
| Dealer-dealer self-custody | Dealer-dealer-controlled keys (HSM or multisig) | Direct proof path for 15c3-3(c) management | Cyber controls, insurance coverage limits, auditability at scale |
| Financial institution sub-custody with broker-dealer directive rights | Financial institution as management location, broker-dealer directs actions | Acquainted custody perimeter for incumbents | Contract phrases and playbooks should show management in incidents |
| Crypto custodian tech with financial institution or belief wrapper | Specialist tooling, management framed by way of agreements | Integration velocity for tokenized safety workflows | Management-location qualification and supervision consistency |
| Good-contract escrow with transfer-agent co-sign | Multisig between broker-dealer and switch agent | Programmable controls for company actions | How examination groups check “management” and recordkeeping over time |
The Dec. 17 refresh additionally retains a line clear for retail-facing companies: Non-security crypto held at a broker-dealer stays outdoors Rule 15c3-3(b).
Companies nonetheless want clear disclosures on which protections apply and which don’t.
Commissioner Hester Peirce has framed the employees FAQs as incremental, whereas pointing to how the steerage can decrease friction for market contributors attempting to suit on-chain exercise into present rule units.
For compliance groups, the near-term tells are concrete: whether or not the SEC FAQ index receives additional edits.
One other key sign is whether or not FINRA interpretations evolve towards standardized examiner checklists for on-chain management proof and books and data.
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