Bringing Qualified Custody to Crypto: Anchorage Digital Submits Comment Letter to the SEC

This week we submitted our comment letter to the SEC on its proposed safeguarding rule. As the only federally chartered digital asset bank, our goal is to help shape the proposed rule to ensure it enhances the safekeeping of digital assets, while also being practical and prudent for both investors and custodians.

This rule proposal seeks to broaden the scope of the existing custody rule to require Registered Investment Advisors (RIAs) to maintain not just client “funds" and “securities,” but all “assets”, including crypto with a qualified custodian.

Our key recommendations:

• Regarding types of assets within scope: We urged the SEC to consider excluding certain (especially newer and smaller) digital assets from requiring qualified custody maintenance, at least initially, when there is no qualified custodian providing support for such assets, to avoid stifling innovation and capital formation.
• Regarding parity with traditional finance: We recommended that the SEC adopt equal levels of investor protections for clients of traditional asset custodians and clients of digital asset custodians (such as a gross negligence standard, instead of a simple negligence standard).
• Regarding bankruptcy remoteness: While we supported the proposed rule's bankruptcy remote requirements, we highlighted potential consequences of the rule and SAB 121 on certain banks' ability to offer qualified custody services due to bankruptcy remoteness concerns. We also encouraged creating more pathways for federally regulated banks and broker-dealers to become qualified custodians and replacing SAB 121 with a more practical alternative.

Major policy changes like this one, often seek to protect the public good but small details can heavily impact innovation, and that’s why the public review and comment process is so important. We’re proud to participate and  help to shape some of the most critical debates around crypto regulation today. For example, the SEC custody proposal from February 2023 includes two references to one of our earlier letters to the Commission, as well as one reference to our application for a national bank charter from the OCC.

Lastly, we’d like to acknowledge that what we're building affects not only our clients, but the future of our industry—and finance as a whole. We’ve spent the past two years since receiving our charter working with our regulators to pioneer a workable path forward for institutional participation in crypto under the U.S. regulatory perimeter.

Read our full letter to the SEC here.