SEC Proposes Crypto Custody Rules for Investment Advisers and Funds

The Securities and Exchange Commission has proposed new rules to govern how registered investment advisers and regulated funds hold cryptocurrency assets in custody. The proposal would update the Investment Advisers Act of 1940 and the Investment Company Act of 1940, allowing for self-custody arrangements under limited circumstances.

State trust companies would also be eligible to take on custodial roles for client and fund holdings. SEC Chairman Paul Atkins stated that existing rules had failed to keep pace with the growth of digital assets.

The proposal aims to provide a clear regulatory framework for crypto custody, giving investment advisers and funds a compliant pathway where none existed before. This could enable them to offer more cryptocurrency-related services to clients.