SEC Proposes Rules for Crypto Custody by Advisers and Funds

The US Securities and Exchange Commission (SEC) has proposed new rules to govern the custody of cryptocurrency assets by registered investment advisers and regulated funds.

The proposal aims to update existing custody requirements under the Investment Advisers Act and Investment Company Act to better reflect current crypto market practices.

The SEC would allow crypto assets to be held in self-custody under certain circumstances, enable state trust companies to act as custodians for client and regulated fund assets, and update requirements covering financial statement audits and broker-dealer custodial services.

SEC Chair Paul Atkins said the proposal is intended to provide advisers and funds with a compliant pathway for crypto custody, arguing that existing rules were developed around traditional assets and have not kept pace with the growth of the crypto market.