New filings to the Securities and Exchange Commission’s (SEC) Crypto Task Force pressed two linked questions: whether individuals retain an enforceable right to self‑custody digital assets, and when on‑chain liquidity providers should be treated as registered dealers.
Multiple submissions argued that federal rules must respect state efforts that recognise a private right to self‑custody. One filing cited state legislation such as Louisiana’s House Bill 488 to underline the point: residents should keep the prerogative to hold keys themselves. Those contributors urged the Commission not to interpret federal custody rules in ways that would unduly erode that right.
At the same time, SEC staff published guidance explaining how the Customer Protection Rule’s possession and control obligations apply to crypto asset securities when broker‑dealers custody them. The guidance described practical requirements—private key safeguards, technology risk assessments and contingency planning—intended to prevent unauthorized access to assets.
Commentators noted the guidance could enable broker‑dealers to offer custody solutions while still protecting clients’ cryptographic ownership.
What the filings and SEC guidance say
The Blockchain Association’s Trading Firm Working Group asked the SEC to clarify that proprietary trading firms providing on‑chain liquidity should not automatically be treated as dealers when they trade only for their own account and do not solicit customers, custody assets for others or act as agents. The group argued that treating such firms as dealers would raise costs and deter liquidity provision, hindering price discovery in tokenized equity markets.
Filing authors contrasted legacy broker‑dealer rules—designed for intermediated markets—with the mechanics of smart contracts and decentralized settlement. They urged tailored application of securities laws that recognises operational differences while preserving investor protections.
The filings were published while Congress continued negotiating the CLARITY Act; a planned Senate Banking Committee markup was postponed and industry stakeholders remain engaged. Coinbase CEO Brian Armstrong indicated efforts to reach consensus were ongoing, underscoring that legislative outcomes will interact closely with SEC rulemaking.
Investors and market participants will watch two parallel threads: whether the SEC turns its staff guidance into formal custody rules that accommodate self‑custody practices, and whether regulators draw a narrower definition of dealer activity for DeFi market‑makers.
