SEC Proposes Dedicated Crypto Custody Framework for Investment Advisers

The US Securities and Exchange Commission (SEC) has proposed new rules for investment advisers and regulated funds to hold crypto assets. The plan would create a dedicated custody framework while updating requirements written primarily for traditional financial assets.

The proposal, led by SEC Chairman Paul Atkins, aims to provide clearer options for digital asset custody while staying within federal securities laws. According to Atkins, the growth of crypto from a niche market into a major asset class necessitates such changes.

Under the proposal, registered investment advisers could self-custody certain crypto assets if they meet specified conditions. State trust companies would also be permitted to safeguard crypto assets for advisers and regulated funds.

The SEC would amend requirements under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 as part of this effort. The proposed provisions are not yet in effect, and public comments will remain open for 60 days following Federal Register publication.