SEC Proposes Crypto Custody Framework with Self-Custody Option

The US Securities and Exchange Commission (SEC) has proposed a new framework for crypto custody that could give investment advisers and regulated funds alternatives when traditional custodians cannot support a digital asset.

The proposal, which covers registered investment advisers, registered investment companies, and business development companies, introduces rules and amendments under the Investment Advisers Act of 1940 and Investment Company Act of 1940. It addresses adviser audits and broker-dealer custody services.

One of the biggest changes is a pathway for advisers to self-custody crypto under certain circumstances, alongside formal recognition of state trust companies as potential custodians.