SEC Mandates Broker-Dealers to Control Crypto Private Keys
The SEC's Division of Trading and Markets issued a definitive statement on December 17, 2025, requiring broker-dealers to maintain exclusive control over private keys when holding crypto asset securities for customers. This move ends years of regulatory ambiguity that hindered traditional financial institutions from offering crypto custody services.
Firms must now comply with Rule 15c3-3—the Customer Protection Rule—by demonstrating possession through private key control. The SEC emphasizes that no third parties, including customers or affiliates, can have access to these keys or the ability to transfer assets without the broker-dealer's approval.
Written policies must align with industry best practices to safeguard private keys against theft, loss, or unauthorized use. This regulatory clarity paves the way for broader institutional participation in tokenized securities, from stocks to bonds.
