SEC Proposes New Crypto Custody Framework for Advisers and Funds
The US Securities and Exchange Commission (SEC) has proposed a new custody framework for registered investment advisers and regulated funds holding crypto assets. According to Commissioner Hester Peirce, the proposal would allow advisers to hold certain client crypto directly under certain circumstances.
This includes when no qualified custodian is available, and the adviser must determine that no permitted custodian is available for the asset before doing so. They must repeat this determination quarterly.
The SEC's proposal aims to update financial statement audit requirements for advisers and broker-dealer custody services for regulated funds.
Additionally, the proposal seeks to widen the definition of who may serve as a qualified custodian, allowing state-chartered trust companies to hold crypto for advisory clients and regulated funds.