Galaxy stated on social platform X that many registered investment advisors (RIAs) face difficulties meeting client demands to allocate funds to DeFi while complying with SEC custody rules. The key pain point is that current regulations require client assets to be held with a qualified custodian, effectively excluding self-custody paths and preventing traditional financial accounts from directly participating in DeFi strategies, highlighting a structural conflict between regulatory frameworks and decentralized finance.
Regulatory Compliance vs. DeFi Demand
Galaxy posted on social media platform X that numerous registered investment advisors (RIAs) struggle to respond to client demand for allocating capital to decentralized finance (DeFi) markets while maintaining compliance with U.S. Securities and Exchange Commission (SEC) custody rules. The core issue is that existing regulations mandate client assets must be held by a qualified custodian, a requirement that effectively eliminates self-custody options, thereby blocking traditional financial accounts from direct participation in DeFi strategies. This situation underscores a structural tension between the current regulatory framework and the decentralized finance sector, leaving RIAs caught between compliance obligations and client expectations.
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