SEC Proposes New Crypto Custody Rules, Challenging Traditional Bank Dominance

The Securities and Exchange Commission (SEC) has proposed new rules for crypto custody, shifting the focus from traditional bank custodians to state trust companies and allowing advisers to hold assets themselves when no qualified custodian is available.

This change would give state trust companies a permanent place in regulated crypto custody and create a more competitive market where regulatory status is still important but no longer the only factor. Crypto-native custodians like Coinbase, Gemini, and Fireblocks could gain a clearer route to institutional clients, while banks would have to defend their relationships based on asset coverage, service breadth, and integration with client portfolios.

The proposed rules also introduce new requirements for self-custody, including documented safeguarding expertise, cybersecurity controls, regular reviews, and independent internal-control reporting. This could create business opportunities for companies that sell institutional self-custody infrastructure, such as Fordefi and Fireblocks.