SEC Proposes Modernized Crypto Custody Rules to Unlock Multi-Trillion Dollar Market

The Securities and Exchange Commission (SEC) has proposed new rules to modernize the custody of crypto assets held by registered investment advisers and regulated funds.

The proposal aims to address the challenges faced by institutions in managing digital assets securely while adhering to federal securities regulations.

The existing custody rules were designed for traditional assets and failed to consider the needs of blockchain-based assets, according to the SEC.

The new rules would allow investment advisers and regulated funds to offer investment strategies regarding cryptocurrencies more easily while maintaining investor protections.

The proposal also includes provisions for limited self-custody of cryptos in certain conditions, which would require further mandates for private key security protocols and cybersecurity measures.

SEC Chair Paul Atkins emphasized that the growth of crypto has surpassed its regulatory frameworks, with crypto growing from a niche technology into a multi-trillion-dollar asset class.