The SEC advises retail investors to understand risks and options before storing digital assets as regulators integrate crypto into traditional banking. The guidance outlines custody mechanics and trade-offs between self-managed and third-party wallets, emphasizing the irreversible consequences of losing private keys or compromised access.

Investors must distinguish between hot wallets for faster transactions and cold wallets for stronger protection against hacking, but with less portability. Physical cold storage devices pose additional risks of loss or theft, resulting in permanent asset loss. Self-custody requires full responsibility for security, backup procedures, and technical setup.

Those opting for third-party custodians should research how assets are safeguarded, whether hot or cold storage is used, and if practices like rehypothecation or asset commingling are employed. Investors should verify insurance coverage, responses to bankruptcy or hacks, and fees for transactions and transfers.

The SEC shifts focus from enforcement to policy development to position the US as the global crypto capital. Regulatory divisions are building frameworks to support innovation while protecting investors, evidenced by closing investigations without charges and granting no-action letters for tokenization services.

The Depository Trust and Clearing Corporation is allowed to tokenize traditional assets starting in late 2026, ensuring ownership rights and investor protections. Five crypto firms have been conditionally approved to launch or convert into national trust banks, streamlining operations under a single federal standard and eliminating state-by-state regulations.

Read more at Yahoo Finance: Know the Risks Before You Store