Regulating Digital Asset Wallets: Protecting Investors in Tokenized Markets

A SIFMA podcast episode in which president and CEO Kenneth E. Bentsen Jr. talks with colleagues Peter Ryan, Charles DeSimone and Micah Smith about how digital asset wallets should be regulated as tokenized securities markets develop. Ryan describes what a wallet is — an app or hardware device holding the cryptographic keys that control a blockchain address — and explains that the debate is whether wallet providers performing broker-like functions should face broker-dealer rules or a separate or exempt framework. Smith begins walking through SIFMA's four-part wallet taxonomy: basic self-custody, self-custody with added services, basic custodial, and custodial with added services.

1. SIFMA sent letters to the SEC Crypto Task Force on tokenized security markets, wallet providers and broker-dealer regulation, and non-custodial wallet providers, plus a response to the Trading and Markets Division on staff exemptions for ce
2. A wallet holds the cryptographic keys controlling a blockchain address; the assets sit on the ledger, not in the wallet, and a non-custodial wallet is described as an access point rather than an account.
3. SIFMA's stated position is a "same risk, same activity, same regulatory outcome" approach: providers performing broker-like functions such as custody, order routing, venue creation or advice should face broker-dealer rules, while disinteres
4. The letters set out four wallet types — basic self-custody, self-custody with added services, basic custodial, and custodial with added services — with the first dividing question being whether the wallet takes custody of customer keys.