tZERO secures approval to custody digital assets, becoming second firm to get US regulators' sign off

Financial technology firm tZERO Group Inc. said it had received approval from U.S. regulators to become a special purpose broker-dealer for "digital asset securities custody," marking the second firm to have received that license. 

The Securities and Exchange Commisson and the Financial Industry Regulatory Authority approved for tZERO to custody digital assets, according to a statement released by the firm on Tuesday.

"Now, as a result of this effort and philosophy, we are at the very avant-garde of regulatory innovation in the United States as one of only two broker-dealers entrusted by the regulators to custody digital asset securities," said Alan Konevsky, executive vice president and chief legal & corporate affairs officer of tZERO in the statement. 

"We will leverage this unique opportunity, on behalf of the digital asset industry at large, to illustrate how positive regulatory clarity can produce real-world innovation, novel products and real commercialization across of range of traditional financial and real world assets — as we advance towards an integrated regulated infrastructure layer and connective tissue for compliant digital assets," Konevsky added. 

tZERO's announcement is preceded by digital asset firm Prometheum, which received similar approval from the SEC last year and later from FINRA to offer digital asset securities clearing and settlement services through its special purpose broker-dealer license.

The crypto industry and the SEC have been at odds on how digital assets should be regulated. The SEC has consistently warned that crypto exchanges need to register with the agency. Over the past year, it has charged Coinbase, Binance and Kraken for allegedly operating as an unregistered exchange, broker, dealer and clearinghouse. Meanwhile, crypto firms have argued that it's not possible to register with the agency. 

Prometheum itself has faced the ire of the industry, with probes coming from the Blockchain Association and Republican lawmakers. The Blockchain Association alleged that the firm had a "sweetheart deal" with the SEC in July 2023. 

FINRA declined to comment. An SEC spokesperson said the agency declined to comment about specific entities. 

Update: Sept. 10, 3:05 p.m. UTC to include that FINRA declined to comment

Update: Sept. 10, 6:45 p.m. UTC to include SEC's response