SEC Proposes New Crypto Custody Framework for Investment Advisers

The U.S. Securities and Exchange Commission (SEC) has proposed a new regulatory framework for the custody of crypto assets by investment advisers and regulated funds.

The proposal, announced on October 1, 2026, aims to modernize existing custody rules that were largely developed before the internet era and do not provide a clear compliant pathway for managing crypto assets.

According to SEC Chairman Paul Atkins, 'existing custody rules predate the internet and leave advisers and funds without a clear compliant pathway for an asset class clients increasingly demand.'

The proposal would allow self-custody in limited circumstances and permit state trust companies to serve as custodians. However, it also raises concerns about cybersecurity and key-control standards.

Commissioner Hester Peirce emphasized that 'self-custody' in the adviser context refers to the adviser acting as a custodian for client assets, not retail investors holding their own keys.