The staff of the Division of Trading and Markets (the “Staff”) of the Securities and Exchange Commission (“Commission”) has prepared the following responses to frequently asked questions relating to crypto asset[1] activities and distributed ledger technology. These responses represent the views of the staff of the Division of Trading and Markets. They are not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved their content. These responses, like all staff statements, have no legal force or effect: they do not alter or amend applicable law, and they create no new or additional obligations for any person.

The staff may update these questions and answers periodically. In each update, the questions added after publication of the last version will be marked with “MODIFIED” or “NEW.”

Broker-Dealer Financial Responsibility 

Q1: Does paragraph (b) of Exchange Act Rule 15c3-3 apply to crypto assets that are not securities?

A1: No. Paragraph (b) of Rule 15c3-3 applies only to securities carried by a broker-dealer for the account of customers or for a proprietary securities account of another broker or dealer, known as a “PAB account” (as further defined in paragraph (a)(16) of Rule 15c3-3).

Q2: Could a broker-dealer establish control of a crypto asset that is a security via paragraph (c) of Rule 15c3-3?

A2: In the Staff’s view, yes. The Staff notes that although certain control locations in paragraph (c) of Rule 15c3-3 reference a security being in certificated form to establish control under that provision, the Staff will not object if such crypto asset securities are not in certificated form when held at an otherwise qualifying control location under paragraph (c) of Rule 15c3-3.

Q3: Is compliance with the Commission’s 2020 statement – “Custody of Digital Asset Securities by Special Purpose Broker-Dealers” – (the “SPBD Statement”)[2] mandatory for broker-dealers seeking to custody customer crypto assets that are securities?

A3: No. Rule 15c3-3(b) requires a broker-dealer to obtain and “maintain the physical possession or control” of all fully paid securities and excess margin securities carried by the broker-dealer for the account of customers. The SPBD Statement set forth a temporary Commission position or “safe harbor” that a broker-dealer, under certain specified circumstances, would not be subject to a Commission enforcement action on the basis that the broker-dealer deems itself to have obtained and maintained physical possession or control of customer fully paid and excess margin securities. However, the SPBD Statement did not amend Rule 15c3-3 or any other rule. Therefore, in the Staff’s view, a broker-dealer carrying crypto asset securities for a customer or PAB account may establish control under paragraph (c) of Rule 15c3-3, as discussed in question 2 above. 

Q4: Do broker-dealer custody and capital requirements prohibit a broker-dealer from facilitating in-kind creations and redemptions in connection with a spot crypto exchange-traded product (ETP)?

A4: No. However, broker-dealers taking proprietary positions in the assets underlying an ETP would need to account for those assets as part of their net capital calculations. The Staff will not object if a broker-dealer treats a proprietary position in bitcoin or ether as being readily marketable for purposes of determining whether the 20% haircut applicable to commodities under Appendix B of Rule 15c3-1 applies.

Q5: What haircut should a broker-dealer take in calculating its net capital under Rule 15c3-1 for a proprietary position in payment stablecoin?[3] (NEW 2/19/26)

A5: The staff will not object if a broker-dealer treats a proprietary position in payment stablecoin[4]  as having a “ready market” under Rule 15c3-1, and takes a haircut of 2% of the market value of the greater of the long or short proprietary position in payment stablecoin in calculating its net capital. 

Q6: Are crypto assets that are investment contracts treated as securities under the Securities Investor Protection Act of 1970 (“SIPA”) and protected by Securities Investor Protection Corporation (“SIPC”) if they are not the subject of a registration statement filed under the Securities Act of 1933? [5] 

A6: No, SIPA defines “security,” in pertinent part, as “any investment contract or certificate of interest or participation in any profit-sharing agreement . . . if such investment contract or interest is the subject of a registration statement with the Commission pursuant to the provisions of the Securities Act of 1933 . . ..” Therefore, investment contracts that are not the subject of a registration statement filed under the Securities Act of 1933 are not protected under SIPA.

Q7: Does SIPC protect customer claims for non-security crypto assets when held for the customer by a SIPC member broker-dealer?

A7: No. In general, SIPC protection extends to customer claims for “securities,” as defined under SIPA, that are entrusted to a SIPC member broker-dealer.

Q8: In light of the fact that SIPC does not protect custodial claims for crypto assets that are not securities, are there ways to help ensure that customers’ non-security crypto assets at a broker-dealer will be returned to customers if the broker-dealer becomes insolvent? 

A8: Possibly. For example, a broker-dealer may agree with its customers that non-security crypto assets custodied by the broker-dealer for the customers for purposes of Article 8 of the Uniform Commercial Code be treated as “financial assets” and carried in a “securities account,” as those terms are defined in Article 8. Such treatment could help ensure that customer non-security crypto assets do not become part of the broker-dealer’s estate if the broker-dealer is placed in a liquidation under SIPA or the Bankruptcy Code. Non-security crypto assets are not protected by SIPA and may not be protected by any other specific insolvency regime, and customers may be exposed to loss of such assets in the event of an insolvency.

Q9: If a broker-dealer conducts a non-security crypto asset business, are there ways to help ensure adequate records are made and preserved?

A9: Yes. The Staff views prudent recordkeeping practices as being essential for investor protection in the operation of a broker-dealer, to perform an audit or examination of the broker-dealer, and for a trustee appointed under SIPA or otherwise to liquidate the broker-dealer. In the Staff’s view, a broker-dealer that conducts a non-security crypto asset business could make and keep the same records for its non-security crypto activities as it does for its securities activities. 

Transfer Agents

Q10: Is a person acting as a transfer agent for an issuer of a crypto asset that is a security required to register with the SEC as a transfer agent?

A10: Maybe. The term “transfer agent” is defined in Section 3(a)(25) of the Exchange Act as any person who engages on behalf of an issuer of securities or on behalf of itself as an issuer of securities in any of five enumerated activities: (A) countersigning securities upon issuance; (B) monitoring for unauthorized issuances; (C) registering the transfer of securities; (D) exchanging or converting securities; or (E) transferring record ownership of securities by bookkeeping entry without physical issuance of securities certificates (collectively, “3(a)(25) Activities”). Under Section 17A(c)(1) of the Exchange Act, a transfer agent that performs any of these 3(a)(25) Activities with respect to a security that is registered under Section 12 of the Exchange Act or which would be required to be registered except for the exemption from registration provided by Section 12(g)(2)(B) or Section 12(g)(2)(G) of the Exchange Act (i.e., certain securities issued by a registered investment company or an insurance company) (collectively, “Section 12 Securities”) must register as a transfer agent with the SEC (or with one of the Federal bank regulators if the transfer agent is a bank). Importantly, multiple entities may perform one or more 3(a)(25) Activities on behalf of the same issuer. For example, the registered transfer agent hired by an issuer might register the transfer of the issuer’s securities but hire one or more other transfer agents to monitor for unauthorized issuances or perform other processing and recordkeeping functions. Exchange Act Rule 17Ad-9(h)-(k) defines some of the relationships among transfer agents providing services for the same issuer.

To determine whether registration as a transfer agent is required, persons providing services for crypto assets that are securities thus should (i) determine whether those securities are Section 12 Securities and (ii) analyze the services, functions, or activities they are performing with respect to those securities and determine whether any of those services, functions, or activities quality as 3(a)(25) Activities. If an entity is not providing services for any Section 12 Securities, or is only providing services for Section 12 Securities that do not qualify as 3(a)(25) Activities, it would not be required to register as a transfer agent.

Q11: Could a registered transfer agent utilize distributed ledger technology as its official Master Securityholder File, as that term is defined under Exchange Act Rule 17Ad-9(b), or a component thereof? 

A11: In the Staff’s view, yes, provided that the transfer agent complies with all other applicable requirements under the federal securities laws, including the recordkeeping, reporting, examination, and other requirements of Sections 17(a)(1) and 17(b) of the Exchange Act; the turnaround and other requirements of Exchange Act Rule 17Ad-2; the recordkeeping and other requirements of Rule 17Ad-6; the record retention and other requirements of Rule 17Ad-7; the prompt posting and other requirements of Rule 17Ad-10; the aged record difference, buy-in, and other requirements of Rule 17Ad-11; the safeguarding and other requirements of Rule 17Ad-12; and the accounting control, report, and other requirements of Rule 17Ad-13. Provided these requirements are met, in the Staff’s view, the transfer agent would not need to maintain a duplicate or “digital twin” of its master securityholder file exclusively off-chain. 

Staff understands that some transfer agents’ master securityholder files comprise multiple files or systems. In the context of distributed ledger technology, this may mean that transaction information, such as wallet address, asset balance, ownership percentage, number of shares or units, date of purchase, and transaction ID, is maintained on a blockchain while personal information, like the investor’s name, investor ID, address and other contact information, Tax ID or social security number, and other identifying or non-public information, is kept off-chain within the transfer agent’s proprietary systems. In the Staff’s view, provided the transfer agent ensures that its records are at all times secure, accurate, up-to-date, produceable to the Commission and its staff in an easily-readable format, and maintained for the required time periods under the rules, the specific technology, systems or files that comprise the records would generally be within the transfer agent’s discretion. 

Security/Non-Security Crypto Asset Pairs Trading by National Securities Exchanges (“NSEs”) and Alternative Trading Systems (“ATSs”)

Q12: Do federal securities laws prohibit an NSE or ATS from offering pairs trading involving a security, including crypto assets that are securities (“crypto asset securities”),[6] and a crypto asset that is not a security or otherwise being offered and sold as a security (“non-security crypto asset”)? (MODIFIED 12/17/2025)

A12: No, provided the NSE or the ATS satisfies its statutory and regulatory requirements under the federal securities laws.[7] The Staff understands that pairs trading is a common strategy applied in crypto asset trading and takes different forms. One form of pairs trading might include a buyer and a seller exchanging a security for a non-security crypto asset by simultaneously selling one asset while buying another without exchanging the non-security crypto asset for U.S. dollars (“USD”) or other fiat currency.

Pairs trading would need to occur in a way that complies with federal securities laws and regulations. For example, an NSE trading pairs may need to amend its rules. Likewise, NMS plan amendments may be necessary to accommodate security and non-security crypto asset pairs trading on NSEs.[8]

An ATS trading pairs would need to comply with Regulation ATS, including by noticing its pairs trading activities as required by Form ATS or Form ATS-N, as applicable. Rules 301(b)(8) and (b)(9) refer to recording and reporting securities transactions in USD.[9] For transactions based on the value of non-USD assets, such as non-security crypto assets, an ATS could provide transaction value data in USD using consistent, impartial, and reasonable methods commonly applied by market participants for converting the value of an asset that is not quoted in USD.

In addition, an ATS that trades NMS stock (“NMS Stock ATS”) that displays subscriber orders in an NMS stock to any person (other than an employee of the ATS) and meets the specified volume thresholds would need to comply with Rules 301(b)(3)[10] and (b)(4) of Regulation ATS.[11] For purposes of Rule 301(b)(3)(ii), for orders based on the value of non-USD assets, such as non-security crypto assets, the NMS Stock ATS could convert the value of the non-USD asset to USD using the same consistent, impartial, and reasonable methods described above before providing the orders to the NSE or NSA, in a manner that is consistent with the rules of the NSE or NSA, for inclusion in quotation data made available by the NSE or NSA pursuant to Rule 602 of Regulation NMS.[12] 

Form ATS and Form ATS-N Disclosures, Generally

Q13: Can Form ATS and Form ATS-N[13] accommodate disclosures about trading operations involving crypto asset securities, including pairs trading?  (MODIFIED 12/17/2025)

A13: Yes. ATSs would disclose information about their operations involving crypto asset securities, including pairs trading, on Form ATS or Form ATS-N, as applicable, including:

• Differences in treatment or access to services among or between subscribers on Exhibit A of Form ATS and other applicable Items of Form ATS-N;[14]
• Persons that can access the ATS, conditions a potential subscriber must satisfy to access the ATS (i.e., onboarding requirements), and how an approved subscriber can enter orders and trading interest into the ATS onExhibits F and H[15] of Form ATS and Part III, Items 1, 2, and 5 of Form ATS-N;
• Securities traded on Exhibit B of Form ATS;
• Trading operations on Exhibit F of Form ATS[16] and Part III of Form ATS-N;[17]
• Clearance and settlement processes on Exhibit F of Form ATS and Part III, Item 22 of Form ATS-N;
• Service providers that provide ATS functions or services on Exhibit E of Form ATS and Part II, Item 6 of Form ATS-N;
• Products and services the broker-dealer operator offers subscribers for the purpose of effecting transactions or submitting, disseminating, or displaying orders and trading interest in the ATS and the terms and conditions for use on Part II, Item 5 of Form ATS-N; and
• Trading by the broker-dealer operator and its affiliates on the ATS on Form ATS Exhibit F and Form ATS-N on Part II, Items 1 and 2, and the broker-dealer operator’s policies and procedures to protect subscriber confidential trading information on Part II, Item 7 of Form ATS-N.

ATS Broker-Dealer Operator Non-ATS Activities

Q14: Do federal securities laws prohibit a broker-dealer operator of an ATS from performing broker, custodial, or clearing functions in addition to operating its ATS? (MODIFIED 12/17/2025)

A14: No. As a condition to the exemption from the definition of exchange provided by Regulation ATS, an ATS must register as a broker-dealer;[18] however, the broker-dealer operator of the ATS is not precluded from engaging in broker, custodial, or clearing functions in addition to operating its ATS.[19] The broker-dealer operator must comply with the federal securities laws applicable to each activity. Please see Q14 below addressing clearing agency registration.

Clearance and Settlement

Q15: Do federal securities laws require a broker-dealer operator of an ATS to register as a clearing agency when clearing and settling transactions in crypto asset securities for its own customers? (MODIFIED 12/17/2025)

A15: No, provided that the broker-dealer operator of the ATS is a registered broker-dealer engaging in customary brokerage or customary dealing activities. Exchange Act section 3(a)(23)(B)(iii) provides that the term “clearing agency” does not include, among other things, any broker or dealer if such broker or dealer would be deemed to be a clearing agency solely by reason of functions performed by such institution as part of customary brokerage or dealing activity. For example, in connection with the operation of its ATS, the broker-dealer operator may clear and settle customer transactions by debiting and crediting the appropriate customer accounts on its own internal books and records.

Exchange-Traded Products

Q16: With regard to Regulation M, would the Staff object if persons transact in shares of exchange-traded products (ETPs) referencing crypto assets (crypto ETPs) if they were to operate under the circumstances described in the Staff’s 2006 Regulation M no-action letter related to commodity-based investment vehicles (CBIV NAL)?[20] (MODIFIED 12/17/2025)

A16: No, the Staff would not object to crypto ETPs operating under the circumstances described in the CBIV NAL, including that the crypto ETP shares are listed and trade on an NSE pursuant to rules or listing standards approved by Commission order, and that such persons are not engaging in any prohibited activities outside of the Regulation M distribution. As stated in the CBIV NAL, the anti-fraud and anti-manipulation provisions of the federal securities laws would continue to apply.

The Staff welcomes requests for assistance (including requests for additional staff statements) relating to these issues and questions.