KETJU Research
For compliance

Sample Written Procedure: Digital Asset Holdings in Client Accounts

A sample. Your firm’s counsel adapts it to your business, and it is not legal advice. Bracketed items are choices for the firm.

Purpose

This procedure sets how [Firm] finds, reviews, records, and discusses digital assets that clients hold. It supports Rule 206(4)-7(a), which requires written policies “reasonably designed to prevent violation” of the Advisers Act, and the duty of care in SEC Release IA-5248, which requires a reasonable investigation before advice so that advice does not rest on “materially inaccurate or incomplete information.”

Scope

This procedure covers every digital asset a client holds that the firm advises on, reports on, bills on, or learns about, whether the firm manages it or the client holds it away from the firm. That includes:

Definitions

Responsibilities

Procedure

1. Recording a client’s holdings

  1. The advisor records each holding as Asset, Protocol, Chain, and Custody, with the date.
  2. The advisor records a public address or a statement line. The firm never asks for, stores, or holds a private key, seed phrase, or signing permission.
  3. The advisor records whether the firm advises on, bills on, or only reports the holding.

2. The due-diligence file for each holding

The file contains:

  1. what the asset is and who issues it;
  2. who backs it and what backs it;
  3. who can freeze it, using the Freeze words;
  4. how the client exits and how long that takes;
  5. the verdict, its reason, and any limits;
  6. the sources, each with the date read;
  7. the date of the finding and the next review date.

The designated reviewer confirms all seven items before the advisor advises on the holding.

3. Eligibility against the issuer’s terms

  1. The advisor records the issuer’s stated terms for who may hold the asset, and the client’s facts.
  2. The file shows Qualifies, Does not qualify, or Not stated.
  3. On Does not qualify, the advisor tells the client in writing within [2] business days, notifies the CCO, and records what the client says. The firm does not advise buying more and does not help move the asset to avoid the issuer’s terms. The CCO decides with counsel what further steps apply.
  4. On Not stated, the advisor records that the issuer’s terms are silent and asks the issuer or counsel.

4. Monitoring and changes

  1. The designated reviewer checks findings on held assets at least [quarterly] and on every notice of a change in a verdict, a term, or a key.
  2. Within [1] business day of a change, the reviewer lists the affected clients and tells the advisor and the CCO.
  3. Within [3] business days, the advisor decides whether advice changes. If it does, the advisor tells the client in writing.
  4. The file records the date the change was published, the date the firm learned of it, the date the advisor acted, and the client’s decision. A reaction later than [3] business days is logged as a compliance exception.

5. Custody and view-only access

Rule 206(4)-2(d)(2) defines custody as “holding, directly or indirectly, client funds or securities, or having any authority to obtain possession of them.” The SEC’s October 2026 proposal (Release IA-7023, comments due December 7, 2026) would define self-custody as “possession of any portion of a client crypto asset’s key materials” and treats authority to obtain keys without holding them as custody. It is a proposal, and the current rule governs.

  1. Staff read public addresses only.
  2. Before accepting any access, the advisor writes down what it can and cannot do. An exchange key that can withdraw, a signer role, a key share, or a token approval that lets a firm address spend client assets is escalated to the CCO before use.
  3. The CCO records the custody conclusion for each client.

6. Marketing and client communications

  1. A communication to more than one person that offers advisory services is an advertisement under Rule 206(4)-1(e)(1). The CCO or a designee approves it before use.
  2. A statement of fact, including a verdict or a yield, must have a reasonable basis the firm can substantiate on request (Rule 206(4)-1(a)(2)). Benefits are shown with fair and balanced risks (Rule 206(4)-1(a)(4)).
  3. Gross performance is shown with net performance (Rule 206(4)-1(d)(1)). Projections are hypothetical performance under Rule 206(4)-1(d)(6).
  4. Testimonials and endorsements follow Rule 206(4)-1(b).
  5. A verdict is quoted with its exact word, its date, and its source. The firm, not the research provider, makes the recommendation.

7. Books and records

Under Rule 204-2(e)(1) the firm keeps records five years from the end of the fiscal year of the last entry, the first two years in an appropriate office. Advertisements are kept five years from last use under Rule 204-2(a)(11). Written communications about advice are kept under Rule 204-2(a)(7). This includes records of each client’s holdings, due-diligence files, change logs, client decisions, and approved advertisements. [Counsel confirms any state period.]

8. Annual review

The CCO reviews this procedure and how well it works at least annually under Rule 206(4)-7(b), tests a [number] of files against it, documents the results and fixes, and keeps the work papers. The review also covers changes in the firm’s business and in the rules.

9. Use of third-party research

The firm may rely on a research vendor such as Ketju Research for facts. The firm still owns:

  1. the choice of vendor and the record of why;
  2. the check that a finding covers the client’s actual holding;
  3. the decision to advise, and the advice;
  4. client disclosures and the client’s informed consent;
  5. the custody conclusion;
  6. oversight of the vendor, including how it handles client data.

Ketju Research states that it is “research, not investment advice” and that it “does not manage assets, take custody, or accept compensation from any protocol it covers.” The firm records those statements and the date read.

Sources

All read 2026-10-16.