SEC Roundtable on Crypto Custody: Is Your RIA Ready to Hold Crypto? Find Out!

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Well, well, well, the U.S. Securities and Exchange Commission is at it again. On April 25, the SEC will host the third roundtable in its never-ending quest to make sense of crypto—this time, focusing on “crypto custody.” Fancy, right? It’s called “Know Your Custodian: Key Considerations for Crypto Custody”—a title that screams “we’re in charge here.” This event will feature the usual suspects from the digital asset world: Mark Greenberg of Kraken, Rachel Anderika of Anchorage Digital Bank, and Veronica McGregor from Exodus, among others. You might even get a peek at the big wigs from Fidelity Digital Asset Services, WisdomTree, and Fireblocks. Not bad for a meeting, huh?

On the SEC’s side, we’ll see Commissioners Hester Peirce and Caroline Crenshaw, along with acting Chair Mark Uyeda and Crypto Task Force Chief of Staff Richard Gabbert. These folks are here to make sure the crypto world doesn’t spiral into chaos—or at least, that’s the plan.

“It is important for the SEC to grapple with custody issues, which are some of the most challenging as we seek to integrate crypto assets into our regulatory structure,” said Commissioner Peirce, who’s heading up the Task Force.

This roundtable is the third installment of the SEC’s four-part series. The first two talks were about token classification and crypto trading regulations (as thrilling as watching paint dry). But don’t worry, they’ve saved the best for last: asset tokenization and decentralized finance. Grab your popcorn.

But wait, the real action might just be happening outside the SEC’s conference room, where some loud voices are already calling for change. These voices? Well, they belong to none other than venture capital powerhouse Andreessen Horowitz—aka a16z. They sent a fancy letter to the SEC on April 9, urging the Commission to update its ancient crypto custody rules. They’ve got a point—current regulations, based on the Investment Advisers Act of 1940 (yes, you read that right), aren’t exactly in step with the needs of today’s digital assets.

A16z: Let RIAs Hold Crypto Directly

According to a16z, the crypto world isn’t about just “safe keeping” assets. Oh no, it’s about governance rights, staking, and all those fun yield-generating capabilities that make digital assets… well, cool. So when you stash your crypto with a traditional custodian, those features can go bye-bye, limiting their usefulness. Oops.

In response, a16z outlined five “Crypto Custody Principles,” because why not add another buzzword to the mix? The firm believes that RIAs (Registered Investment Advisers) should have the right to self-custody crypto temporarily, without triggering some sort of regulatory apocalypse. According to them, “If a third party can’t meet both requirements, an RIA’s transfer of an asset to temporarily self-custody… shouldn’t be considered a transfer out of custody.” Makes sense, right?

“Under this principle, we posit that RIAs should select a third-party crypto custodian… that allows for the RIA to exercise economic or governance rights,” a16z noted. “If a third party can’t meet both requirements, an RIA’s transfer of an asset to temporarily self-custody… shouldn’t be considered a transfer out of custody.”

And forget about the whole “hot wallet vs. cold wallet” debate. a16z has better ideas. Instead of drawing hard lines, they propose a risk-based approach to minimize loss, theft, or misuse. Revolutionary stuff, folks.

While a16z didn’t demand a full-blown overhaul of the SEC’s Custody Rule, they’re asking for temporary guidance to make sure RIAs don’t get stuck in the past while trying to keep their crypto secure. It’s not a “let’s burn the rulebook” moment, but it’s a step in the right direction.

“Our aim is not to expand the scope of the Custody Rule beyond securities,” a16z clarified, “but to extend its goals—security, periodic disclosure, and independent verification—to the new asset class of tokens.”

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2025-04-17 10:48