SEC Proposes Clear Crypto Custody Rules Amid Peirce's Departure
The Securities and Exchange Commission (SEC) has proposed new rules for the custody of cryptocurrency assets by registered investment advisers and regulated funds. The move aims to provide a clear regulatory framework for the industry, which has been operating without one for years. According to the SEC's proposal, investment advisers will be allowed to self-custody crypto assets under certain conditions, including quarterly review to determine if a qualified custodian is available.
The initiative coincides with the departure of Commissioner Hester Peirce, who led the Crypto Task Force and will leave the agency on Friday. The SEC has modified its quorum requirements in response, reducing it from three to two members with the provision that a single commissioner can act if the other has a conflict of interest.
The proposal also enables the use of state-chartered trust companies as valid custodians and allows self-custody when no qualified custodian is available. This mechanism could apply to newly launched tokens that custodians do not yet support, according to an SEC official. The 760-page document details the types of entities authorized to custody crypto assets, internal recordkeeping requirements, and disclosure obligations.