SEC Publishes a Flurry of Crypto-related Statements Aimed at Regulatory Clarity
The Securities and Exchange Commission ("SEC") published a Frequently Asked Questions ("FAQs") page focusing on trade and settlement issues, requested feedback on how to improve the crypto regulatory landscape for alternative trading systems ("ATS") and exchanges trading crypto assets (securities and non-securities), and published staff guidance on the application of Exchange Act Rule 15c3-3's "possession and control" requirement to crypto asset custody.
On December 17, 2025, the SEC's Division of Trading and Markets ("Division") published the FAQs to address questions relating to involvement by broker-dealers, transfer agents, and ATS with crypto asset activities. The FAQs demonstrate the SEC's willingness to work with interested market participants.
The FAQs focus on: (i) the application of the Customer Protection Rule (Exchange Act Rule 15c3-3) and the Net Capital Rule (Exchange Act Rule 15c3-1) to crypto assets; (ii) transfer agent functions relating to crypto assets; (iii) pairs trading by exchanges and ATS; (iv) ATS disclosures relating to crypto asset operations; (v) whether clearing and settling crypto asset securities requires ATS to register as clearing agencies; and (vi) the application of Regulation M to crypto exchange-traded products. Some of these FAQs represent significant shifts from previous Commission policy; for instance, the staff now believes a registered transfer agent can utilize distributed ledger technology as its official master securityholder file, and a broker-dealer operating an ATS generally would not have to register as a clearing agency when clearing and settling transactions in crypto asset securities for its own customers.
On the same day, the Division also released a statement clarifying the circumstances under which it would not object to a broker-dealer's determination of its own "physical possession" of a crypto asset security. The Division specified five required measures to be taken by broker-dealers to qualify for its non-objection. The broker-dealer must: (i) have access to the crypto asset securities and be able to transfer them; (ii) have policies and procedures to assess the underlying technology to mitigate risk; (iii) not undertake to maintain custody of crypto asset securities based on technology with identified problems; (iv) protect private keys; and (v) prepare for disruption events and maintain compliance.
In the third statement published on the same day, the SEC's Crypto Task Force sought input on the trading of crypto asset securities by ATS and exchanges to further refine its views on how existing rules should be changed to facilitate crypto asset trading.
As the SEC continues to focus on crypto, the FAQs and the statements add more regulatory structure and indicate that additional guidance and rulemaking should be forthcoming. This may encourage broker-dealers, who may not have been willing to hold crypto assets due to regulatory uncertainty, to engage in the market.
