SEC Proposes New Rules for Crypto Asset Custody
The US Securities and Exchange Commission (SEC) has proposed new rules to provide a clearer framework for the custody of crypto assets by registered investment advisers and regulated funds. The changes aim to address the regulatory uncertainty surrounding digital assets, which are currently held under federal securities laws.
Under the proposal, digital assets could be held through state trust companies in certain circumstances, and crypto assets can be held through self-custody arrangements under specific conditions. This would give regulated funds more options for offering investment strategies linked to crypto assets, as well as update certain requirements related to financial statement audits for registered investment advisers and broker-dealer custodial services for regulated funds.
SEC Chairman Paul S. Atkins explained that existing custody rules were designed for traditional assets and largely predate the internet, which does not adequately address the custody needs of newer crypto assets. He added that custodial services for crypto assets can take months to become available after an asset is launched, creating challenges for investment advisers and regulated funds.
The SEC's proposal aims to address this gap through a framework while modernizing existing requirements to reflect current industry practices and support crypto innovation in the US. The proposed changes are not final, and the SEC is seeking public comments on the proposal before making a final decision.