tl;dr
Venture capital firm Andreessen Horowitz (a16z) has requested the SEC to overhaul rules for registered investment advisers (RIAs) on safeguarding digital assets. In a letter to the SEC’s Crypto Task Force, a16z advocates allowing RIAs to hold crypto assets directly under specific safeguards, updatin...
Venture capital firm Andreessen Horowitz (a16z) has proposed that the SEC update custody rules to allow registered investment advisers (RIAs) to directly hold crypto assets under specific safeguards, reflecting the unique nature of digital assets.
a16z urges the SEC to permit RIAs to self-custody security tokens and clarifies that such self-custody should not conflict with existing Custody Rule or fiduciary duties.
The firm emphasizes that crypto assets vary and that custody solutions should enable RIAs to exercise economic and governance rights like staking and on-chain voting.
a16z advocates for a risk-focused security model over rigid categorizations like hot vs. cold wallets to safeguard digital assets effectively.
The SEC is considering revising registration thresholds for RIAs, signaling ongoing regulatory recalibration that may impact custody rules and compliance burdens.
In a letter to the SEC’s Crypto Task Force, a16z advocates allowing RIAs to hold crypto assets directly under specific safeguards, updating outdated custodial models. The firm also proposed five “Crypto Custody Principles” to guide reform while protecting investors.
a16z urges the SEC to permit self-custody of security tokens by RIAs and clarify that this aligns with custody and fiduciary rules. They emphasize that crypto assets differ in rights and custody needs, recommending flexible security approaches beyond traditional classifications.
This appeal comes amid indications the SEC may revisit RIA registration thresholds and seek regulatory reforms affecting smaller firms.
In their communication, a16z stressed that RIAs should be able to hold crypto assets directly under specific conditions with well-defined safeguards. The firm posited that custody solutions must allow RIAs to exercise economic or governance rights, such as staking, yield farming, and on-chain voting, which are often inaccessible in traditional custodial accounts.
a16z cautioned against rigid classifications like hot versus cold wallets, advocating instead for security architectures focused on mitigating risks like loss, theft, or misuse, regardless of storage method.
The firm clarified that their goal is not to expand the scope of the Custody Rule beyond securities but to apply its core principles—security, periodic disclosure, and independent verification—to crypto assets.
This initiative closely follows remarks by then-Acting SEC Chair Mark Uyeda, who indicated the agency might revisit the $100 million threshold for RIA registration. Uyeda suggested upcoming reforms could reduce compliance burdens for smaller firms.
Though new Chair Paul Atkins has since replaced Uyeda, the dialogue around regulatory recalibration and modernization of custody standards for crypto assets remains active within the SEC.