SEC Proposes Overhaul of Crypto Custody Rules to Support Institutional Investment

The U.S. Securities and Exchange Commission (SEC) has proposed revisions to crypto custody rules for investment advisers and regulated funds.

The proposal, which aims to lower regulatory barriers for institutions, would allow crypto self-custody under certain conditions and permit trust companies established under state law to serve as custodians for client assets and fund assets.

The SEC stated that existing asset custody rules have not kept up with the growth of cryptocurrencies, which have evolved from a niche market into a multi-trillion-dollar asset class since Bitcoin emerged in 2008.

SEC Chairman Paul Atkins emphasized that the proposal presents custody options that meet legal requirements for investment advisers and funds, allowing them to offer clients a broader range of crypto-related investment strategies.