SEC Proposes Regulatory Framework for Cryptocurrency Custody

SEC Chair Paul Atkins has highlighted a new proposal aimed at creating a regulatory framework for the custody of cryptocurrencies. The proposal seeks to replace outdated rules and provide a clear pathway for investment advisers and funds to hold and manage crypto assets. According to Atkins, the cryptocurrency market has grown from a niche interest to a multi-trillion-dollar asset class, but regulations have not kept pace.

The proposed rules would allow for self-custody of cryptocurrencies under certain circumstances and permit state trust companies to act as custodians for client and regulated fund cryptocurrency assets. This move aims to remove barriers that limit advisers' ability to offer cryptocurrency-related investment advice. SEC Commissioner Hester Peirce has previously described cryptocurrency self-custody as a 'very fundamental American right.'

Atkins emphasized that the new proposal is a step towards providing regulatory clarity to cryptocurrencies. He stated that the SEC will 'act decisively' to provide clarity, regardless of the outcome of the CLARITY Act. The SEC has also proposed a new regulation to enable cryptocurrency projects to raise money without immediate registration requirements.