The SEC has released guidelines for cryptocurrency asset custody, systematically outlining wallet types and major risks

The U.S. Securities and Exchange Commission (SEC) released investor guidance on cryptocurrency wallets and asset custody on Friday local time, systematically outlining the advantages and risks of different cryptocurrency storage methods.

The guidance compared self-custody and third-party custody models, reminding investors to focus on whether the custody institution engages in asset rehypothecation and whether client assets are mixed. The SEC also introduced the main differences between hot wallets and cold wallets: hot wallets, being connected to the internet, face higher risks of hacking and cybersecurity threats; cold wallets, while reducing online attack risks, may lead to permanent loss of assets if the storage device is damaged, stolen, or if the private key is lost. Market participants believe that this guidance indicates a significant shift in the SEC's regulatory attitude towards the cryptocurrency industry. The day before, SEC Chairman Paul Atkins stated that the traditional financial system is accelerating its migration to on-chain, and the SEC has also approved DTCC to explore the tokenization of assets such as stocks, ETFs, and government bonds.