SEC Proposes Framework for Crypto Custody to End 'Grey of Uncertainty'

U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins announced a new proposal to create a regulatory framework for the custody of cryptocurrencies. The proposal aims to provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before.

Atkins highlighted that the cryptocurrency market has grown from a 'niche curiosity into a multi-trillion-dollar asset class,' but regulations have not kept pace. He emphasized that the new rules would replace the 'grey of uncertainty' created by rules of a 'bygone era.'

The proposal would allow cryptocurrencies to be held in self-custody under 'certain circumstances' and permit state trust companies to act as custodians for client and regulated fund cryptocurrency assets. This would remove barriers that can limit advisers' ability to offer cryptocurrency-related investment advice.

SEC Commissioner Hester Peirce earlier deemed cryptocurrency self-custody a 'very fundamental American right,' saying people should be free to hold assets themselves or use intermediaries.