The US Securities and Exchange Commission (SEC) has issued new guidelines to help retail investors better protect their crypto-assets.
On December 12, the Office of Investor Education and Advocacy of the SEC published an Investor Bulletin. This document outlines standard models for crypto storage and the risks associated with holding digital assets.
SEC warns retail investors of hidden crypto-storage risks
The focus of the SEC comes as the storage of digital assets becomes increasingly important.
According to industry estimates, the crypto storage sector is growing annually by nearly 13% and is expected to reach a value of $6.03 billion by 2030.
This growth shows how many assets are now stored outside the traditional financial infrastructure and how important the management of these assets is.
Against this backdrop, the regulator urges investors to thoroughly investigate third parties that store crypto-assets and to understand how platforms handle customer funds.
“If a third party that holds your assets is hacked, ceases to exist, or goes bankrupt, you may lose access to your crypto-assets,” warned the SEC.
The bulletin states that some providers are re-lending customer assets or lending them to others, while other companies are consolidating customer funds instead of keeping them separate.
According to the SEC, such practices during market turmoil lead to greater losses, as the risk is spread across multiple parties.
Therefore, the SEC advises investors to check whether custodians maintain clear records or books of who owns what. Investors should also examine how their assets would be treated if the platform goes bankrupt.
The guidelines emphasize that storage arrangements have a significant impact on the outcome for investors if something goes wrong, even if the market prices themselves do not change.
The bulletin also addresses self-custody, which can be attractive to investors who want full control over their crypto-assets.
At the same time, the SEC warned that those who manage their own wallet are fully responsible for securely storing their private keys. The regulator notes that lost passwords usually lead to permanent loss of assets, with no chance of recovery.
“Self-custody also means that you alone are responsible for the security of the private keys of your crypto-assets. If your wallets are lost, stolen, damaged, or hacked, you may permanently lose access to your crypto-assets,” said the SEC.
This attention shows that the regulator has adjusted its tone.
As more and more people own crypto, the SEC is placing more emphasis on education rather than punitive measures. The focus is now on operational risks, no longer on whether digital assets belong in an investment portfolio.