The U.S. SEC's Division of Trading and Markets has issued a statement regarding the application of the "physical possession or control" requirement under the Securities Exchange Act's customer protection rule 15c3-3(b)(1) in the context of crypto asset securities. The statement outlines conditions under which broker-dealers can be considered to have "physical possession" of client assets. These include having direct access and the ability to transfer assets on-chain, as well as establishing and maintaining written policies for evaluating and continuously reviewing the distributed ledger technology and networks they rely on. The SEC also specifies that if there are known significant security or operational issues, or other major custody risks, possession cannot be recognized.