Forward Industries Proposes Three-Tier Regulatory Framework for Digital Asset Custodians

Forward Industries has released a "Digital Asset Custody Framework" in response to SEC Commissioner Hester Peirce's statements regarding crypto custody and lending strategies. The framework suggests categorizing custodians into three types: Type I (Use), Type II (Follow), and Type III (Advisory). Type I allows users to choose and set parameters themselves, with developers only responsible for maintaining the code; Type II is set by the operator with predetermined strategies that users can choose to follow, and the operator must co-invest; Type III grants the manager actual decision-making authority over strategies or specific asset transactions and is subject to stricter regulation. The framework also recommends that custodians holding a mix of securities and commodities be jointly regulated by the SEC and CFTC, and requires all custodians to comply with basic rules such as related-party transaction disclosures, code audits, exclusion of disqualified persons, and anti-fraud measures.

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