Oct. 20, 2023
there is still a lot of regulatory ambiguity around digital asset custody that needs to be addressed. Some examples of areas lacking clarity include: Custody definitions - The SEC rules propose expanded custody definitions for digital assets, but exactly which activities constitute custody remains vague. Jurisdiction - It's unclear if SEC custody rules would apply to non-US companies holding digital assets for US investors. Security requirements - Specific security practices like multi-sig, cold storage, etc. aren't mandated, leaving acceptable standards ambiguous. Insurance needs - Insurance coverage requirements for potential loss of digital assets are not defined. Sub-custodians - Standards and duties for companies providing sub-custodial services are uncertain. Self-custody - Rules around investors self-custodying digital assets and implications for advisers are hazy. Liability - Where liability lies for stolen or lost digital assets under different custody models is not precisely delineated. You're correct regulatory uncertainty in these areas and others could create compliance challenges and impede innovation. The SEC should work quickly to provide more definitive guidance on acceptable digital asset custody standards and practices as the market evolves. Reducing ambiguity will benefit both investors and responsible crypto companies. More consultation with technical experts may assist the SEC in shoring up the remaining grey areas in their oversight framework. Sent with Proton Mail secure email.