The U.S. Securities and Exchange Commission has proposed new rules and amendments creating a tailored framework for registered investment advisers and regulated funds to custody certain crypt
The U.S. Securities and Exchange Commission has proposed new rules and amendments creating a tailored framework for registered investment advisers and regulated funds to custody certain crypto assets.
The October 1 proposal would permit advisers to hold eligible client crypto assets themselves in limited circumstances when no permitted custodian is available. It would also create a route for state-chartered trust companies to serve as custodians for client and regulated fund crypto assets.
SEC Chair Paul Atkins described the framework as a compliant pathway for crypto custody, targeting gaps created by custody rules developed primarily for traditional financial assets.
The proposal forms part of the SEC’s broader Project Crypto agenda covering crypto distributions, custody, trading and onchain financial markets.
An investment adviser could use the new self-custody route only after determining that no permitted custodian is available for the relevant crypto asset.
That determination would have to be made before the adviser takes custody and then reviewed on a quarterly basis. The framework refers to an adviser holding assets on behalf of clients rather than investors directly controlling their own wallets.
The custody amendments would not automatically apply to every crypto asset. Under the Advisers Act framework, they would cover crypto assets that are funds or securities. For regulated funds, the relevant requirements would extend to crypto assets classified as securities or similar investments.
The SEC proposal also includes additional changes to existing adviser and regulated fund custody requirements, including provisions involving financial statement audits and broker-dealer custodial services.
Eligible state trust companies could become permitted crypto custodians under the proposed framework.
Before using one, an adviser or regulated fund would need a reasonable basis for determining that the company is authorized by the relevant state banking authority to provide crypto custody.
The custodian would also need written policies and procedures designed to protect crypto assets and related cash against theft, loss, misuse and misappropriation. Those determinations would be reassessed annually.
Expanding the available custody providers addresses one of the practical problems surrounding crypto investment products, where traditional qualified custodians may not support newly issued assets or the technology needed to safeguard them.
Crypto custody is the latest piece of a wider regulatory program advanced by the SEC during 2026.
The Commission proposed new crypto fundraising rules in August through Regulation Crypto Assets, creating tailored offering pathways for certain investment contracts involving crypto assets.
It followed in September with a five-year Innovation Exemption covering qualifying onchain trading of tokenized U.S.-listed stocks and temporary relief for certain liquidity providers.
The crypto custody rules remain a proposal and have not entered into force. Public comments will remain open for 60 days after the proposing release is published in the Federal Register.
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