SEC Proposes New Crypto Custody Rules Amid Clarity Act Gridlock

The Securities and Exchange Commission (SEC) has proposed new rules for crypto custody, aiming to provide registered investment advisers and regulated funds with clearer guidelines on holding digital assets. The proposal builds on existing laws, using the Investment Advisers Act of 1940 and the Investment Company Act of 1940 as its foundation.

The SEC's move is seen as a response to the growing demand for crypto access from clients. However, the rules do not guarantee that an adviser can offer any token, but rather provide guidelines on holding assets that qualify as funds or securities. The proposal also includes safeguards for self-custody, such as cybersecurity protections and annual reviews.

The Clarity Act, which would have set a broader framework for crypto oversight between the SEC and CFTC, remains blocked in Congress. The Senate voted 50 to 49 against advancing the bill on September 15, with disagreement centered on ethics concerns involving President Donald Trump's family.