The United States Securities and Exchange Commission (SEC) has issued new guidance aimed at helping private investors better secure their cryptocurrencies.
On December 12, the SEC's Office of Investor Education and Advocacy published an investor bulletin. This document reviews common storage models for cryptocurrencies as well as risks related to the management of digital assets.
The SEC warns private investors about hidden risks of cryptocurrency storage.
The SEC's emphasis comes at a time when the storage of digital assets is continuously increasing.
Particularly, industry estimates indicate that the crypto custody sector is growing nearly 13% annually and will reach $6.03 billion by 2030.
The development highlights how much wealth is currently outside traditional financial infrastructure and how important the management of these assets is.
Against this background, the authority urged investors to carefully consider third-party custodians and to find out how platforms handle customer funds.
"If a third-party custodian is hacked, shut down, or goes bankrupt, you could lose access to your crypto assets," the SEC warned.
The statement mentions that some companies may use customer funds as collateral or lend them out, while others combine customer assets instead of keeping them separate.
According to the SEC, such practices have increased losses during previous market crises because the risk has spread among different actors.
For this reason, the SEC urges investors to ensure that custodians maintain clear ownership records. Additionally, it is recommended to evaluate how platforms would handle assets in the event of a potential failure.
The guidance emphasizes that custody arrangements can have a significant impact on an investor's position in the event of disruptions – even if the price of the assets does not change.
The statement also addresses self-custody and identifies its appeal for investors who want to manage their assets themselves.
At the same time, the SEC reminded that managing one's own wallet transfers all responsibility for protecting private keys to the investor. When identification details disappear, assets are generally lost permanently and there are practically no recovery options.
"Self-custody means you are responsible for the security of your cryptocurrency's private keys. If wallets are lost, stolen, damaged, or hacked, you may permanently lose access to your crypto assets," the SEC stated.
This emphasis also reflects a broader change in the regulatory authority's attitude.
The ownership of cryptocurrencies by retail investors is already quite common, so the SEC is now emphasizing education more than enforcement. The primary focus is on operational risks, rather than discussions about whether cryptocurrencies belong in investment portfolios.
