Is Your Crypto Really Safe? SEC Warns Investors on Wallet and Custody Risks
The post Is Your Crypto Really Safe? SEC Warns Investors on Wallet and Custody Risks appeared on BitcoinEthereumNews.com.
TLDR Hot wallets offer convenience but face cyberattack and hacking risks. Cold wallets are safer online but can be lost, stolen, or damaged. Self-custody gives control but requires full responsibility for keys and seed phrases. Third-party custodians hold keys but may rehypothecate or commingle assets. The U.S. Securities and Exchange Commission (SEC) has released an investor bulletin detailing how retail investors can safely store and access crypto assets. The guide explains risks associated with different types of crypto wallets and custody methods, while providing actionable tips for protecting digital holdings. The SEC stresses that crypto wallets themselves do not hold digital assets. Instead, they secure the private keys needed to access crypto holdings. Understanding the difference between hot and cold wallets, managing self-custody versus third-party custody, and protecting seed phrases are essential steps for safeguarding crypto investments. Curious about crypto wallets and how to store and access crypto assets? Check out our Crypto Asset Custody Basics Investor Bulletin.https://t.co/x4HMYMHLAe pic.twitter.com/bSbP25nzOc — U.S. Securities and Exchange Commission (@SECGov) December 13, 2025 Hot and Cold Wallets: Convenience Versus Security Crypto wallets generate two cryptographic keys: a private key for authorizing transactions and a public key for receiving assets. Losing a private key means losing permanent access to the crypto in the wallet, making secure storage crucial. Hot wallets are internet-connected, providing fast access for transactions. Their connectivity, however, exposes users to hacking, malware, and other cyber threats. Cold wallets are offline devices, such as USB drives or external hardware, offering higher security against online attacks. Physical loss or device damage, though, can permanently erase crypto assets. Investors are also advised to store seed phrases securely. These backup phrases allow wallet recovery if private keys are lost or compromised. Failing to protect a seed phrase can lead to irreversible loss. Choosing Between Self-Custody and…
Filed under: News - @ December 14, 2025 2:26 pm