SEC Issues New Guide On Crypto Asset Custody

In a new Investor Bulletin, the agency’s education office lays out the basics of crypto custody and offers a checklist of questions for anyone deciding where to keep digital assets.

The message is simple. What you choose for storage can matter as much as what you choose to buy.

Keys, Wallets and Staying Online or Offline

The SEC starts with first principles. A crypto asset is any token or coin that lives on a blockchain, and what really proves ownership is not the token itself but the private key attached to it. That key is a long code, like a master password, that lets you send or spend funds. Lose it, and there is no reset button. Alongside it sits a public key, which works more like an email address that others can use to send assets to your wallet without touching your private key.

Those keys live inside a crypto wallet, which is just software or hardware that stores and uses them. Hot wallets stay connected to the internet on your phone, computer or browser, which makes trading and payments fast but exposes you to hacks and malware. Cold wallets live offline on devices such as hardware sticks or even written seed phrases, making cyber attacks harder but raising different risks like loss, damage or theft of the device itself. Whatever you use, securing that seed phrase, the human readable backup for your keys, is critical. Share it once and control is gone for good.

The bulletin then turns to a decision that many new investors do not fully think through. With self custody, you hold your own keys and live with the full responsibility for setup, security and backups. That can be empowering for people who value independence and privacy, but it demands technical comfort and careful habits. A single phishing link or lost hardware wallet can erase years of savings, with no recourse.

More About Crypto Regulation

U.S. Treasury Secretary Scott Bessent has signaled a friendlier policy stance toward Bitcoin, announcing that his department plans to remove key regulatory barriers that have been slowing adoption. In practice, this likely means simplifying rules that make it hard for banks, asset managers, and fintech firms to hold or transact in Bitcoin within existing compliance frameworks.

By clearing some of this red tape, the Treasury aims to give regulated institutions more room to offer Bitcoin products while still enforcing strict standards around disclosures, consumer protection, and anti money laundering controls.

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