SEC Proposes New Crypto Custody Rules for Advisers and Funds

The U.S. Securities and Exchange Commission (SEC) has proposed new rules and amendments for registered investment advisers and regulated funds to hold crypto assets. The proposal, announced on October 1, aims to create a tailored framework for digital-asset custody, modernizing existing requirements and potentially giving advisers and funds greater flexibility in how crypto assets are held.

SEC Chair Paul Atkins described the proposal as an effort to establish a clearer, compliant pathway for investment advisers and funds managing crypto assets under federal securities law.

The custody debate has been ongoing for years, with technical questions surrounding who holds private keys, how assets are protected, and what controls exist in case of issues. However, the audience asking these questions has expanded to include investment advisers, fund managers, compliance teams, and corporate finance professionals.

The proposed rules aim to provide clarity in this area, raising expectations around how services are explained publicly. Businesses offering institutional products, custody infrastructure, or investment services may need to adjust their communication strategies to meet these new requirements.