SEC Proposes Crypto Custody Framework Under Two Federal Investment Laws

The U.S. Securities and Exchange Commission (SEC) has proposed an October 1 framework for crypto custody under two federal investment laws, allowing conditional self-custody and state trust company custody for investment advisers and regulated funds.

The proposal covers registered investment advisers, registered investment companies, and business development companies. Advisers could hold crypto assets themselves when no permitted custodian is available, subject to conditions, including quarterly assessments that no custodian can support the asset.

State trust companies would face checks on their authority and safeguards before serving as custodians. The SEC has opened the changes for comment rather than adopted them as final rules.