Broker-Dealer Custody of Digital Asset Securities: A Regulatory View and How it Works

Expired

Program Number

29159

Program Date

2019-10-07

CLE Credits

As digital assets continue to gain traction within the financial system, legacy institutions and innovative fintech startups are looking for ways to incorporate digital asset securities as part of their asset management services. Unlike traditional assets, digital assets are generally created, stored, exchanged, and managed in a decentralized computation network. Due to its decentralized nature, these types of assets pose new and singular custody challenges with respect to the broker-dealer relationship. This is particularly true as companies such as Fidelity, Bakkt and Coinbase prepare to provide custody of digital assets for sophisticated institutional clients and individual customers, all while ensuring that they comply with all state and federal regulations, including the Securities Exchange Act of 1934 and the Securities Investor Protection Act of 1970. This presentation provides an overview of what constitutes digital assets, the current legal and regulatory landscape affecting the broker-dealer relationship, how government agencies including the SEC and FINRA have responded to this new asset class, and what companies and consumers should expect in the future.