BPI, FSF and the Association of Global Custodians Comment on SEC’s Crypto Asset Custody Framework

Dear Chairman Atkins:

The Bank Policy Institute^[1] ("BPI"), the Association of Global Custodians^[2] ("AGC"), and the Financial Services Forum^[3] ("FSF" and collectively, the "Associations") write to express our strong concerns regarding the structure of the crypto asset custody framework under

consideration by the U.S. Securities and Exchange Commission (the "SEC") and its potential implications for investor protection. We understand that the SEC is actively considering material changes to custody requirements for SEC-regulated entities that invest in the crypto asset market, such as amending the definition of "qualified custodians"^[4] and allowing investment advisers and funds to self-custody assets.^[5] This letter also responds, in high-level terms, to certain questions laid out in the statement by Commissioner Hester M. Peirce as head of the SEC Crypto Task Force entitled "There Must Be Some Way Out of Here" requesting information from stakeholders on activities involving blockchain-based digital assets.^[6]

The Associations believe that any modification to the existing regulatory framework that would allow crypto asset custody to operate under reduced regulatory standards poses a significant threat to investor protection. As the SEC navigates the evolving digital asset landscape and looks to provide regulatory clarity for crypto asset custody, its foundational mandate must continue to be the protection of investors. If the SEC permits crypto firms or investment advisers to provide custody services outside of the existing qualified custodian framework, it is imperative that these custody providers be held to equally rigorous standards, including asset segregation requirements, ongoing regulatory oversight, and prudential mandates equivalent to those that currently govern qualified custodians. A failure by a crypto asset custodian, whether for financial or operational reasons, could cause immense harm not only to those whose assets were custodied, but to investors in wide swaths of the market, thereby necessitating strong investor protection.

The Associations welcome the SEC's leadership in the ongoing development of digital technologies, including the significant improvements the SEC has already made to the ability of banks to engage in the crypto asset market by withdrawing the March 2023 safekeeping proposal and rescinding SAB 121.^[7] The Associations believe that custody banks have an important role to play in supporting responsible innovation in the crypto asset market, and we look forward to continue collaborating with the SEC to provide recommendations that would ensure high standards of investor protection. We are also happy to meet with you and SEC staff to further explore the issues and policy recommendations discussed below.

To read the full comment letter, please click here, or click on the download button below.

[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group representing the nation's leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost two million Americans, make nearly half of the nation's small business loans, and are an engine for financial innovation and economic growth.

[2] The Association of Global Custodians is a group of 12 financial institutions that provide securities safekeeping services and asset-servicing functions to primarily institutional cross-border investors worldwide. Established in 1996, the AGC primarily seeks to address regulatory and market structure issues that are of common interest to global custody banks.

[3] The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. FSF member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors and communities throughout the country. FSF promotes policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace and a sound financial system.

[4] 17 C.F.R. § 275.206(4)-2(d)(6).

[5] Paul S. Atkins, Keynote Address at the Crypto Task Force Roundtable on Tokenization, SEC (May 12, 2025), https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-crypto-roundtable- tokenization-051225-keynote-address-crypto-task-force-roundtable-tokenization#_ftnref10; Paul S. Atkins, American Leadership in the Digital Finance Revolution, SEC (July 31, 2025) https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125.

[6] Hester M. Peirce, There Must Be Some Way Out of Here, SEC (Feb. 21, 2025), available at https://www.sec.gov/newsroom/speeches-statements/peirce-statement-rfi-022125

[7] Withdrawal of Proposed Regulatory Actions, SEC (June 12, 2025), available at https://www.sec.gov/files/rules/final/2025/33-11377.pdf; Staff Accounting Bulletin No. 122, SEC (Jan. 23, 2025), available at https://www.sec.gov/rules-regulations/staff-guidance/staff-accounting-bulletins/staff- accounting-bulletin-122.