SEC Proposes New Crypto Custody Rules to Bridge Regulatory Gap
The US Securities and Exchange Commission (SEC) has proposed new regulations for the custody of digital assets, aiming to bring clarity to investment advisers and fund managers on how to hold cryptocurrencies.
The proposal seeks to revise the custody provisions in the Investment Advisers Act of 1940 and the Investment Company Act of 1940. SEC Chairman Paul Atkins noted that federal securities regulations have struggled to keep pace with the rapid development of Bitcoin since 2008, leading to a regulatory gap that this new model aims to address.
The proposal would allow for certain cryptocurrencies to be stored using self-custodial mechanisms as long as specific standards are met. This could enable more institutions to offer custody services than are currently available for traditional assets within the banking and brokerage systems.