SEC Paves Way for Adviser Crypto Self-Custody with State Trust Company Custodians

SEC Chair Paul Atkins has directed agency staff to draft a proposal that would allow investment advisers to self-custody crypto assets, using state trust companies as custodians subject to conditions. The direction is significant for fund managers and custody providers.

In remarks made on September 14, Atkins stated he had asked staff to develop a framework addressing both custody questions affirmatively under appropriate safeguards. He emphasized that the views expressed were his own and not necessarily those of the Commission.

The proposal would mark a significant change from current practices, as state trust companies already have a limited route into the market through conditional no-action relief issued in September 2025. This relief requires annual due diligence, audited financial statements, independent internal-control reporting, asset segregation and written limits on lending or rehypothecation without client consent.

SEC Commissioner Caroline Crenshaw has expressed concerns about the proposal, arguing that custody rules protect investors from theft, loss, and misappropriation. She warned that state trust companies may not carry the same protections as federally chartered banks.