On December 17, 2025, the Staff of the Division of Trading and Markets (the “Division”) of the U.S. Securities and Exchange Commission (“SEC”) issued a Statement explaining its views on the application of paragraph (b)(1) of SEC Rule 15c3-3 to broker-dealers seeking to establish custody of crypto asset securities.
Rule 15c3‑3, commonly called the Customer Protection Rule, requires broker-dealers to maintain physical possession or control of all fully paid and excess margin securities held for customers. Historically, this posed a challenge for crypto asset securities—tokenized forms of equity or debt on blockchains—because they lack traditional custody mechanisms, like centralized clearing agents.
The Division staff issued the statement to clarify how broker-dealers can satisfy the “physical possession” requirement under Rule 15c3‑3(b)(1) when dealing with crypto asset securities. It serves as interim guidance in response to market demand for clarity. In addition, it is limited to addressing only “possession,” not other broker-dealer obligations like financial responsibility rules. The goal is to pave the way for clearer compliance while the SEC continues to consider rule updates.
The Statement indicates that it does not address the “control” prong of Rule 15c3-3, which was separately addressed by the Division in an FAQ published earlier this year. See Division of Trading and Markets: Frequently Asked Questions Relating to Crypto Asset Activities and Distributed Ledger Technology (Updated December 17, 2025), at Question 2 (clarifying that, in the staff’s view, a broker-dealer may establish “control” of a crypto asset security by holding it through a control location specified in paragraph (c) of Rule 15c3-3). See here.
The staff indicated it will not object to broker-dealers treating themselves as having physical possession if they meet all the following five conditions:
First, in terms of access and transferability, the broker-dealer must have direct access to the crypto asset security and the technical ability to transfer it on the related distributed ledger.
Second, concerning assessing the distributed ledger technology (DLT), the broker-dealer must establish, maintain and enforce reasonably designed written policies and procedures to assess the DLT and the associated network prior to undertaking to maintain possession of the crypto asset security, and at reasonable intervals thereafter.
Third, with respect to security and operational risks, the broker-dealer should not deem itself to possess a crypto asset if it uncovers material security or operational weaknesses with the DLT or the network used to access and transfer the asset, or if custodying the asset would otherwise pose material risks to the broker-dealer’s business.
Fourth, concerning protecting the private keys, the broker-dealer must establish, maintain, and enforce reasonably designed written policies, procedures, and controls that are consistent with industry best practices to protect against the theft, loss, or unauthorized or accidental use of private keys required to access and transfer a crypto asset security.
And, fifth, with respect to contingency planning, the “broker-dealer must maintain written policies, procedures, and arrangements that set out in advance steps to address events (a) that could affect possession of crypto assets, such as blockchain malfunctions, 51% attacks, hard forks, or airdrops; (b) that enable compliance with lawful orders to seize, freeze, burn, or prevent transfers; and (c) that provide for the transfer of the crypto assets to a broker-dealer, trustee, receiver, liquidator, or other appropriate person in the event of wind-down, self-liquidation, or an insolvency proceeding. These measures are intended to ensure the continued safekeeping and accessibility of the crypto assets and to provide assurance that a broker-dealer has thoughtfully planned for unexpected disruptions to possession and control.”
In her own Statement, Commissioner Hester Peirce noted her appreciation that the Statement provides clarity about the Division’s views to broker-dealers seeking to provide custody services to their customers. At the same time, she specifically encouraged the Division to swiftly develop recommendations for Commission consideration regarding amendments to Rule 15c3-3 that address the custody of crypto assets.
Under President Biden’s SEC, the Commission issued Release No. 34-90788 in December 2020, which included a nine-point plan for compliance with Rule 15c3-3. The burdens imposed by this plan led to very few broker-dealers offering custodial services. It is hoped that the new guidance will be a stronger inducement to the industry.
