SEC Proposes Framework for Crypto Custody by Investment Advisers and Funds
The U.S. Securities and Exchange Commission (SEC) has proposed a framework for crypto custody under two federal investment laws, allowing conditional self-custody and state trust company custody for investment advisers and regulated funds.
The proposal, which covers registered investment advisers, registered investment companies, and business development companies, would remove custody barriers that restrict crypto-related investment advice.
Under the proposal, advisers could hold client and fund crypto assets themselves in limited circumstances, provided they determine that no permitted custodian is available for the asset, and repeat that assessment quarterly.
For state trust company custody, advisers and funds must assess the company's state authorization and written safeguards before appointing it, then repeat those checks annually.
The SEC has opened the changes for comment rather than adopting them as final rules.