SEC Proposes Framework Allowing Investment Advisers to Hold Crypto Assets

The U.S. Securities and Exchange Commission (SEC) has proposed a new regulatory framework that would allow investment advisers and regulated funds to hold crypto assets through expanded custody options, including self-custody in certain circumstances.

According to SEC Chair Paul Atkins, the proposal seeks to update federal custody rules that were largely developed before digital assets existed. He noted that since Bitcoin's introduction in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure.

The proposed framework would address a long-standing challenge for institutional crypto adoption: the limited availability of qualified custodial infrastructure for certain digital assets. Under the proposal, investment advisers and regulated funds could use state trust companies as crypto custodians. The rules would also allow advisers to custody crypto assets themselves in limited circumstances, including when they determine that no permitted custodian is available.

However, the SEC clarified that adviser self-custody does not mean investors directly controlling their own private keys. Commissioner Hester Peirce emphasized that true self-custody is not the right choice for everyone and that many crypto owners prize being able to custody their own assets.