SEC Releases Alert on Crypto Custody: Understand the Risks Prior to Storing

crypthub

2 days ago

SEC Custody Advisory

The SEC issued a bulletin urging retail investors to grasp crypto‑custody risks. Custody means storing private keys that control digital assets. Losing or compromising a key can cause permanent loss or theft with no remedy.

Hot vs Cold Wallets

Hot wallets stay online for fast transactions but are vulnerable to cyber attacks. Cold wallets keep keys offline on hardware or paper, offering more security but risk physical loss or damage. Users must balance convenience against protection when picking self‑custody or a third‑party custodian.

Regulatory Shift

Under Chair Paul Atkins the SEC is moving from enforcement to policy, seeking to make the U.S. a crypto hub. It has dropped cases, approved token‑ization pilots, and cleared firms for national bank charters. The OCC and other agencies are similarly granting charters and enabling tokenized securities.

Investor Takeaways

Investors should check custodian insurance, breach response, bankruptcy handling, and fee structures. These safeguards mitigate the heightened risk of digital‑asset storage. Ongoing legislation could further impact crypto exposure in retirement accounts.