- Andreessen Horowitz (a16z) has formally requested the SEC to overhaul digital asset custodial rules for registered investment advisers.
- The firm proposes that RIAs should be allowed to self-custody crypto assets under specific conditions while maintaining investor protections.
- A16z outlined five “Crypto Custody Principles” to guide regulatory reform that acknowledges the unique features of digital assets.
Venture capital giant Andreessen Horowitz (a16z) has formally petitioned the Securities and Exchange Commission to revamp its approach to digital asset custody for registered investment advisers. In a letter submitted to the SEC’s Crypto Task Force on April 9, the firm advocates for allowing RIAs to directly hold crypto assets under specific conditions and safeguards.
The request comes as the investment firm published a detailed blog post on Thursday outlining five core “Crypto Custody Principles” designed to modernize regulations while maintaining investor protections. A16z shared the submission on social media, stating: “We submitted our response to the SEC’s request for information about IA custody. We’re excited to see the SEC take steps towards offering guidance for crypto.”
In its letter, the venture firm emphasized that current custody rules were created for traditional financial systems and don’t account for digital assets’ unique characteristics. “We believe the Commission should provide new guidance to facilitate custody arrangements for crypto assets, even if only as a temporary measure until it issues new rules,” the company wrote.
Balancing Innovation and Protection
The firm specifically urged regulators to permit RIAs to self-custody security tokens and clarified that such arrangements wouldn’t conflict with the Custody Rule or fiduciary duties. This recommendation acknowledges that registered investment advisers currently face challenges managing crypto assets under rules designed for conventional securities.
A key component of a16z’s proposal involves recognizing that crypto assets often include economic or governance rights—such as yield farming and on-chain voting—that may be inaccessible through traditional custodial arrangements.
A Standards-Based Approach
Rather than rigid classifications like hot versus cold wallets, a16z advocates for a security architecture focused on mitigating key risks regardless of storage method. “Under this principle, we posit that RIAs should select a third-party crypto custodian… that allows for the RIA to exercise economic or governance rights,” the firm stated.
The timing of the letter is notable, coming just a day after then-Acting SEC Chair Mark Uyeda indicated the agency might revisit its $100 million threshold for RIA registration. Though Paul Atkins has since been confirmed as Chair, Uyeda’s remarks at a recent law conference suggest regulatory recalibration remains under consideration at the Commission.
A16z’s recommendations aim to extend the goals of the Advisers Act’s Custody Rule—including security, disclosure, and verification—to digital assets while acknowledging their unique characteristics in the evolving financial landscape.
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