The U.S. Securities and Exchange Commission’s top crypto lawyer, Taylor Lindman, has signaled the agency’s next regulatory focus: helping firms navigate custody of digital assets, part of a broader push to get businesses comfortable with blockchain technology.
WASHINGTON — The U.S. Securities and Exchange Commission is turning its attention to crypto custody, according to Taylor Lindman, the chief counsel on the agency’s Crypto Task Force.
Speaking at an industry event on Tuesday, Lindman said the SEC is “trying to get firms comfortable with blockchain technology and crypto assets,” putting custody at the center of the regulator’s evolving approach.
Lindman’s remarks offer one of the clearest roadmaps yet for how the SEC under its current leadership plans to address a stubborn gray area: who holds digital assets, and under what rules. While the agency has brought numerous enforcement actions against crypto firms in recent years, custody has emerged as a priority area — one that could determine whether traditional financial institutions feel safe offering crypto services to clients.
The Crypto Task Force, which includes SEC staff from across divisions, is examining how existing securities laws apply to custodial arrangements for digital assets. Lindman indicated that the goal is not just regulatory clarity for its own sake, but practical guidance that firms can actually use.
Industry observers have long noted that the lack of clear custody rules has discouraged banks and broker-dealers from entering the crypto market, despite client demand. Lindman’s comments suggest the SEC is listening to that feedback.
The agency has not yet proposed a specific rule, but Lindman’s public remarks are a signal that formal guidance or rulemaking could follow. In the meantime, the task force continues to engage with market participants, gathering input on how to structure any eventual framework.
No timeline was given for when the SEC might publish specific custody rules, and Lindman did not address pending litigation or enforcement matters. The move is part of a broader effort across the agency to provide clearer parameters for an industry that has often operated in legal limbo.
Analysis
Why This Matters
- Custody rules are a critical missing piece for institutional adoption of crypto; clear guidance could unlock billions in assets currently parked on the sidelines.
- The SEC’s shift from enforcement-first to guidance-first signals a more constructive regulatory posture, potentially reducing compliance risk for banks and broker-dealers.
- How the agency defines custody — who holds keys, whether assets are segregated, insurance requirements — will determine which business models are viable.
Background
The SEC has spent years regulating crypto primarily through enforcement actions, targeting exchanges, ICOs, and lending products. Custody — the safekeeping of private keys and client assets — has been a persistent sore point: no federal framework explicitly covers it, and conflicting state and SRO rules have left firms hesitant. The Crypto Task Force was formed to coordinate policy, and Lindman’s remarks suggest custody is now a top priority. Broadly, U.S. financial regulators have been under pressure to align with global standards, and the SEC’s willingness to engage on custody is a departure from its earlier, more adversarial stance. Still, the agency has not committed to a specific rulemaking, and the details remain uncertain.
Key Perspectives
Crypto industry and institutional investors: They want clear, favorable rules that allow banks to act as custodians, reduce liability, and offer crypto alongside traditional assets. They argue clear guidance is essential for competition with offshore venues.
Traditional financial firms: Banks and broker-dealers have been cautious, citing ambiguous capital requirements and legal risk. Clear SEC guidance could prompt them to enter the market, but they want strict safeguards to avoid regulatory blowback.
Critics and skeptics: Some consumer advocates and pro-crypto hawks worry the SEC will either overreach (imposing bank-like rules that stifle innovation) or under-deliver (issuing vague guidance that leaves gray areas). Others question whether the agency is moving fast enough, given that states like New York have already created their own custody frameworks.
What to Watch
- Any formal SEC proposal or staff guidance on digital asset custody — watch for release date, scope, and whether it addresses key control, and segregation of assets.
- Industry reaction from major banks and custodians; look for public statements or pilot programs launched shortly after any rule is issued.
- Future enforcement actions: if the SEC continues bringing custody-related cases while drafting rules, it could signal a harder line. Conversely, a stay or deferral could indicate a more cooperative phase.
- International alignment: whether the SEC’s approach matches or diverges from EU (MiCA) or UK frameworks, as cross-border firms will need to comply with multiple regimes.