SEC proposes new custody rules for advisers and funds
The SEC proposed crypto custody rules on Oct. 1, allowing advisers and funds to self-custody in limited cases or use state trust companies under new safeguards.
The Blockheight Editors··2 min read
The U.S. Securities and Exchange Commission on Oct. 1 proposed rules for how registered investment advisers and regulated funds can custody crypto assets, creating a framework for limited self-custody and the use of state trust companies. The SEC said the proposal is intended to address barriers under existing custody requirements; its announcement of the proposal says the changes would apply under the Investment Advisers Act and Investment Company Act.
When could advisers or funds hold crypto themselves?
The proposal would allow self-custody in certain circumstances, subject to conditions. SEC Commissioner Mark Uyeda said an adviser could determine that no qualified custodian is available for an asset, with safeguards including custody expertise, cybersecurity protections, annual reviews, internal reporting, account statements and client disclosures.
Uyeda said the proposal recognizes that self-custody can create a conflict of interest and that an adviser’s fiduciary duty would still apply. The conditions are part of the proposal, which has not been adopted as a final rule.
Which outside custodians could hold crypto assets?
The proposal would allow state-chartered trust companies to act as custodians for client and regulated-fund crypto assets, subject to conditions. In his statement on the custody proposal, Uyeda said the rules would set requirements for those companies.
The SEC’s proposal covers registered investment advisers and regulated funds, which the agency describes as registered investment companies and business development companies. It addresses crypto securities and similar investments, along with related reporting and recordkeeping requirements.
What else would change, and what happens next?
The SEC also proposed updating custody requirements to reflect current industry practices. Its announcement says the amendments include changes concerning financial statement audits for registered advisers and broker-dealer custodial services for regulated funds.
The proposal is listed as file S7-2026-35. The SEC says public comments are due 60 days after the proposing release is published in the Federal Register, so the deadline depends on that publication date.
The rules remain proposals: the SEC has not said they are in force. The commission will consider public comments before deciding whether to adopt, revise or withdraw them.