SEC Staff Requests Industry Input on Custody Issues Involving Non-DVP Trading and Digital Assets

SEC Staff Requests Industry Input on Custody Issues Involving Non-DVP Trading and Digital Assets


By: Jessica Forbes, Stacey Song, Joanna D. Rosenberg

On March 12, 2019, the staff (the “Staff”) of the Securities and Exchange Commission (“SEC”) published a letter (the “Letter”) addressed to the Investment Adviser Association (“IAA”) seeking input from investment advisers, other market participants and the public regarding (1) the regulatory status of investment adviser and custodial trading practices that are not processed or settled on a delivery versus payment (“Non-DVP”) basis and (2) the application of Rule 206(4)-2 (the “Custody Rule”) under the Investment Advisers Act of 1940 (the “Advisers Act”) to digital assets. The Letter was prompted by, among other things, issues raised by investment advisers and other market participants following the publication of Division of Investment Management Guidance Update No. 2017-01 (Inadvertent Custody: Advisory Contract Versus Custodial Contract Authority).

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