New Investor Bulletin Outlines Wallet Types, Custody Risks, and Best Practices
The U.S. Securities and Exchange Commission (SEC) has published a new crypto custody and wallet guide, offering investors a clear overview of how digital assets can be stored, managed, and protected. The bulletin is designed as a practical, good-faith primer, addressing common risks and outlining best practices as crypto adoption continues to expand.
The guide explains the differences between self-custody and third-party custody. Investors who choose custodial services are encouraged to carefully review provider policies, including whether assets are rehypothecated, lent out, or commingled rather than held in segregated accounts. These factors can significantly impact asset safety during market stress or insolvency events.
The SEC also breaks down major crypto wallet types. Hot wallets, which are connected to the internet, offer convenience but carry higher risks of hacking and cybersecurity breaches. Cold wallets, stored offline, reduce online attack exposure but introduce risks such as physical theft, device failure, or permanent loss of private keys.
The publication signals a notable shift in regulatory posture. Rather than discouraging crypto usage, the agency is now educating investors on responsible participation. Industry participants described the guide as a meaningful step toward clarity and investor protection.
The custody guide follows recent regulatory moves acknowledging that traditional financial systems are moving onchain, including approval for tokenization of equities, ETFs, and government securities. Together, these developments suggest a more constructive regulatory approach to digital assets in the United States.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.