Galaxy Digital (Nasdaq ticker: GLXY), an institutional cryptocurrency financial services firm, pointed out a structural contradiction between the U.S. Securities and Exchange Commission (SEC)'s custody regulations and the demand for decentralized finance (DeFi). Galaxy Digital stated, "Many registered investment advisers (RIAs) are struggling to comply with the SEC's custody regulations while simultaneously meeting clients' demand for DeFi investments." They explained, "The current regulations require client assets to be held with qualified custodians, effectively excluding self-custody methods, and also making it difficult to directly participate in DeFi strategies through traditional financial accounts." They further emphasized, "Establishing a principle-based regulatory framework that includes MPC-based key management, governance control systems, third-party audits, on-chain transparency, and rigorous protocol due diligence mechanisms is a realistic solution."
