SEC Proposes Crypto Custody Framework for Investment Advisers
The U.S. Securities and Exchange Commission has proposed an Oct. 1 crypto custody framework allowing conditional self-custody and state trust company custody.
The U.S. Securities and Exchange Commission has proposed an Oct. 1 crypto custody framework under two federal investment laws, allowing conditional self-custody and state trust company custody for investment advisers and regulated funds. According to CryptoNews, the proposal covers registered investment advisers, registered investment companies, and business development companies.
Conditional Self-Custody and Trust Companies
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Under the SEC proposal, advisers could hold client and fund crypto assets themselves when no permitted custodian is available, subject to conditions. Commissioner Hester Peirce explained that an adviser must first determine that no permitted custodian is available for the asset, then repeat that assessment quarterly. For state trust company custody, advisers and funds must assess the company's state authorization and written safeguards before appointing it, then repeat those checks annually.
SEC Chairman Paul Atkins stated that the framework addresses uncertainty over how advisers and funds can legally hold crypto assets for clients. The agency noted that the framework removes custody barriers that restrict crypto-related investment advice and allows regulated funds to offer more crypto investment strategies.
Rulemaking Docket and Public Comment
The SEC issued the proposal under file number S7-2026-35, with release numbers IA-7023 and IC-36353. Public comments will remain open for 60 days after publication in the Federal Register. Atkins noted that existing rules under the Investment Advisers Act of 1940 and Investment Company Act of 1940 predate the internet and were written around traditional assets.
Key facts
- The SEC proposed the crypto custody framework on Oct. 1 under file number S7-2026-35.
- The framework permits conditional self-custody and state trust company custody for registered investment advisers and regulated funds.
- Public comments remain open for 60 days following publication in the Federal Register.
- Chairman Paul Atkins stated the rules address legal uncertainties regarding client crypto asset custody.
Source: crypto.news
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