SEC Proposes Crypto Custody Rules for Advisers and Regulated Funds
SEC proposes crypto custody rules for advisers and regulated funds, allowing conditional self-custody and state trust companies to serve as custodians.
Summary
The SEC on Oct. 1, 2026, issued proposal 2026-100 creating a tailored crypto asset custody framework for registered investment advisers, registered investment companies and business development companies. The agency said modernized rules would remove barriers to crypto investment advice, broaden regulated funds’ crypto strategies and provide a compliant pathway for exposure to an asset class Chairman Paul S. Atkins described as multi-trillion-dollar since Bitcoin’s 2008 debut.
Proposed amendments under the Investment Advisers Act of 1940 and Investment Company Act of 1940 would address industry practices, revise financial statement audit requirements for registered advisers and update broker-dealer custodial services for regulated funds. Crypto assets could be self-custodied under certain circumstances, while state trust companies could custody client and regulated fund assets. Public comments are due within 60 days after the proposing release appears in the Federal Register.
Positives
- Conditional self-custody would give advisers and regulated funds an additional method for holding crypto assets.
- State trust companies could serve as custodians for client and regulated fund crypto assets.
- Regulated funds could offer clients a wider range of crypto asset-related investment strategies.
- The SEC said the framework would remove regulatory barriers that inhibit advisers from providing crypto-related investment advice.
Risks & concerns
- The framework remains a proposal and is subject to a 60-day public comment period after Federal Register publication.
- Self-custody would be allowed only under certain circumstances, which the press release does not detail.
- Financial statement audit and broker-dealer custody requirements would change, but the release provides limited operational detail.
