SEC Issues New Guidance for Digital Assets
The U.S. Securities and Exchange Commission (SEC) has released new guidance that may encourage greater institutional engagement with digital assets. An updated FAQ published on May 15 clarifies how current securities regulations apply to broker-dealers and transfer agents involved in cryptocurrency services. SEC Commissioner Hester Peirce remarked that this guidance is an “incremental, not comprehensive” step, indicating that more extensive regulatory changes are forthcoming. She emphasized that the agency’s responses in the FAQ should not raise controversy, as they mainly reiterate existing rules or clarify what is not covered by them.
Chainlink’s Positive Reception
Chainlink has expressed support for the SEC’s update, viewing it as a notable advancement that addresses longstanding concerns from financial institutions regarding the use of public blockchains for functions such as recordkeeping, compliance, and data protection. Although the SEC’s announcement was relatively understated, sources suggest that it was influenced by discussions between Chainlink Labs and the SEC Crypto Task Force in March. Earlier this year, Chainlink’s legal team showcased workflows illustrating how smart contracts and privacy-preserving middleware can comply with securities laws on public blockchains. Co-founder Sergey Nazarov also provided insights into a cross-chain transfer-agent framework that emulates traditional processes while incorporating automated compliance.
Details of the SEC’s Guidance
The new guidance delineates how existing regulatory requirements, such as custody obligations and capital rules, apply to digital assets. The SEC clarified that broker-dealers managing non-security cryptocurrencies, including Bitcoin and Ethereum, are exempt from customer protection rules outlined in Rule 15c3-3, which pertain exclusively to securities. This clarification establishes clearer parameters for firms regarding which types of digital assets are subject to conventional custody regulations. Furthermore, the guidance specifies how broker-dealers should account for digital asset positions in terms of net capital. While the primary focus remains on Bitcoin and Ethereum—currently underlying approved exchange-traded products (ETPs)—the SEC clarified that broker-dealers are not limited to these two assets alone.
Risks and Broader Implications
However, the SEC warned that digital assets not categorized as securities do not enjoy the protections provided under the Securities Investor Protection Act (SIPA). This suggests that customers may face heightened risks when holding non-security cryptocurrencies through registered firms. The updated FAQs also explore how transfer agents can utilize distributed ledger technology (DLT), such as public blockchains, to manage securities records. According to the SEC, transfer agents are permitted to use DLT as their official Master Securityholder File as long as they comply with existing recordkeeping, compliance, and reporting mandates under securities law. The agency noted that the choice of technology is up to the transfer agent, provided that records remain secure, accurate, accessible to the SEC, and preserved for the requisite duration.
Market Implications and Chainlink’s Position
The immediate consequence of these updates is that U.S. financial institutions can begin integrating core fund operations on-chain, utilizing infrastructure that has received regulatory approval. This shift could lead to significant cost reductions for the $132 trillion global fund-administration sector. For Chainlink, this development serves as validation of its efforts. With its Cross-Chain Interoperability Protocol (CCIP) now facilitating real-world institutional projects and playing a role in shaping federal policy, Chainlink appears to be becoming the essential link between traditional finance and compliant on-chain financial systems.
Timeline of Key Events
Mar 24 2025: Chainlink legal team meets SEC Crypto Task Force
Mar 28 2025: Sergey Nazarov briefs SEC on cross-chain transfer-agent model
May 12 2025: SEC Tokenization Roundtable—Atkins sets pro-blockchain tone
May 15 2025: Division of Trading & Markets publishes blockchain FAQ
Conclusion
After a prolonged period of regulatory uncertainty, the U.S. has effectively authorized the use of public blockchains within securities infrastructure. Chainlink, already integrated with various institutions and possessing influence in policy discussions in Washington, appears poised to become the primary middleware for the evolving landscape of tokenized finance.
