SEC Proposes New Crypto Custody Rules for Investment Advisers and Funds

The Securities and Exchange Commission (SEC) has proposed new rules for crypto custody, aiming to provide a 'compliant pathway' for investment advisers and funds to hold digital assets. The proposal, published on October 1, 2026, addresses the existing custody regime's limitations in managing crypto assets.

According to SEC Chairman Paul Atkins, the current custody rules were crafted for traditional assets like stocks and bonds, not designed with crypto in mind. He noted that some provisions predate the internet, underscoring the need for an update.

The proposal allows self-custody under limited conditions, permitting advisers to hold client and regulated fund crypto assets when no permitted third-party custodian is available. State trust companies are also eligible as custodians for crypto assets.

Funds will benefit from updated custody arrangements through broker-dealers and service providers for crypto specifically. The proposal widens the scope of what funds can offer investors, giving them greater flexibility to provide crypto-related investment strategies.