SEC Proposes Rule Changes to Boost Crypto Adoption
The US Securities and Exchange Commission (SEC) has proposed rule changes aimed at making it easier for investment advisers and regulated funds to provide clients with exposure to crypto assets.
The proposal addresses a custody problem that has slowed adoption by firms seeking to allocate specific tokens, as they often struggle to find suitable qualified custodians.
In cases where no eligible custodian is available, the SEC would allow advisers to hold client crypto assets themselves, subject to strict conditions. This includes demonstrating that no permitted custodian exists for each asset and reassessing this conclusion on a quarterly basis.
The proposal also opens the door for certain state trust companies to act as crypto custodians, provided they meet specific requirements, including authorization by the relevant state authority, robust key-management and cybersecurity safeguards, and clear segregation of client holdings from their own assets.