TechFlow, December 14 — According to Cointelegraph, the U.S. Securities and Exchange Commission (SEC) issued an investor bulletin on Friday regarding cryptocurrency wallet and custody guidelines, outlining best practices and common risks associated with various forms of cryptocurrency storage for the investing public.
The guidance details the pros and cons of different cryptocurrency custody methods, including self-custody versus using third parties to hold digital assets. For investors choosing third-party custodians, the SEC recommends understanding the custodian's policies, including whether they "re-pledge" custodied assets or commingle customer funds.
The bulletin also analyzes the characteristics of hot wallets and cold wallets. Hot wallets are internet-connected but vulnerable to hacking, while cold wallets offer offline storage that is more secure but carry the risk of permanent loss due to device failure or private key exposure.
