SEC Proposes Conditional Self-Custody for Crypto Custody

The SEC proposed on October 1, 2026, a framework for the crypto custody of registered investment advisers and regulated funds: conditional self-custody and the use of state trust companies, according to its press release no. 2026-100. Comments will remain open 60 days after the publication of the text in the Federal Register. Cointribune compared this text to the SEC services letter of September 30, 2025: the path the regulator presents as new had already been outlined in the form of a no-action position without legal force.

In Brief

• According to the SEC, an adviser could keep a client’s cryptos themselves only if they determine that no authorized custodian is available.
• State trust companies are admitted as custodians, with separation of client assets and review of their audited accounts.
• Timeline: 60 days of comments after publication in the Federal Register, date not announced.
• Scope: two laws from 1940, and business development companies like registered funds (SEC).

What does the SEC’s Proposal Change for Crypto Custody?

According to the SEC fact sheet, the proposal would open two paths for crypto custody, that is, holding client assets: 

• Self-custody by the adviser, under conditions;
• Custody by a state trust company. 

It targets registered investment advisers and regulated funds, i.e., registered investment companies and business development companies. According to this fact sheet, self-custody would only be possible if the adviser determines that no authorized custodian is available, a check they must reverify each quarter. They must also demonstrate their expertise, protect private keys with joint authorization from at least two persons for each transaction, and obtain a report from an independent auditor on their internal controls within six months.

For a fund, its board of directors should oversee the arrangement. For state trust companies, the adviser or fund should verify, before and annually, that the company is authorized by their state banking authority to hold cryptos, review its audited accounts and internal control report, and require that client assets are segregated from its own funds.

What Does this Text Bring Compared to 2023 and 2025?

A proposed rule replaces a no-action position. On September 30, 2025, SEC services indicated they would not recommend sanctions against advisers and funds treating certain state trust companies like banks, under conditions. But, their letter specifies it has no legal force.

However, Paul Atkins, SEC chairman, had described this path as already workable. On September 14, 2026, he said he asked the services for a proposal allowing crypto self-custody and state trust companies because the latter path “already works in practice”, according to his speech at the Solana Policy Institute. On October 1, his press release describes a different situation:

Today’s proposal would provide a clear regulatory framework for cryptoasset custody, giving investment advisers and funds a compliant path where none existed before.

The two statements reconcile: a path that works in practice is not a path compliant with a rule. The gap between 2025 and 2026 is that of a no-action position without legal force and a rule that the Commission still has to adopt. There is also a shift in approach: the 2023 proposal, officially withdrawn in June 2025, extended the custody rule to all assets, while the 2026 one claims to be tailored to crypto assets.

Date Text Content Status 2023 “Safeguarding Advisory Client Assets” Proposal Extend the crypto custody rule to all assets Officially withdrawn in June 2025 09/30/2025 Investment Management Division Letter No sanctions recommended for state trust companies treated like banks, under conditions No-action position, without legal force 10/01/2026 Proposal 2026-100 Self-custody and state trust companies, under conditions Proposal, 60 days of comments Sources: SEC, withdrawal of the 2023 proposal (06/12/2025); SEC, letter of 09/30/2025; SEC, press release 2026-100 (10/01/2026).

What is the Next Step in the Timeline for the SEC?

The SEC must publish the proposal in the Federal Register, the official U.S. federal journal; comments then remain open for 60 days, according to its press release. The deadline thus does not start on the date of the release but on the date of this publication, which the SEC has not yet announced. 

For a European investor, nothing changes at this stage. In Europe, crypto custody services are mainly regulated by MiCA, with supervision by national authorities, including the AMF in France.

No dated deadline yet exists for the SEC; it depends on the publication in the Federal Register and then the 60 days of comments before any vote on a final text. Most importantly, it is the conditions of self-custody that will determine if risky cryptos like bitcoin can truly remain with an adviser, a point our editorial team will closely follow. For now, a rule without a date succeeds a letter without legal force, and the official stamp is still awaited.