SEC Proposes Crypto Custody Rule Revision to Lower Regulatory Barriers

The U.S. Securities and Exchange Commission (SEC) has proposed a revision to cryptocurrency custody rules for investment advisers and regulated funds. The proposal aims to lower regulatory barriers for investment advisers and allow regulated funds to offer clients a broader range of crypto-related investment strategies.

The SEC's proposal focuses on revising crypto custody standards for registered investment advisers and regulated funds such as unit investment trusts and business development companies. With many existing custody rules drafted before the spread of the internet, the SEC said it will shift them to a system suited to today's market structure.

The key aim is to lower regulatory barriers that investment advisers have faced when providing crypto-related advice. Regulated funds would be able to offer clients a broader range of crypto-related investment strategies. SEC Chairman Paul Atkins said that since Bitcoin emerged in 2008, cryptocurrencies have grown beyond a niche market into a multi-trillion-dollar asset class in which investors actively seek opportunities.

The SEC plans to accept public comments for 60 days after a notice of adoption is published in the Federal Register. The proposal is part of rules and amendments under the Investment Advisers Act of 1940 and the Investment Company Act of 1940.