SEC Proposes Rules for Crypto Custody, Clears Path for Self-Custody

The US Securities and Exchange Commission (SEC) has proposed new rules for registered investment advisers and regulated funds to custody crypto assets under federal securities laws. The proposal, released on October 1, aims to modernize the existing custody framework and remove regulatory barriers that have hindered advisers from offering crypto-related investment advice.

The changes would permit registered investment advisers to hold crypto assets in self-custody under certain circumstances, while allowing state trust companies to act as custodians for client and regulated fund crypto assets. This move is seen as a significant step towards providing a clear regulatory framework for the custody of crypto assets.

According to SEC Chairman Paul S. Atkins, the existing rules have not kept pace with the growth of the cryptocurrency market. 'Our rules and regulations have not kept pace,' he said. 'To that end, today's proposal would provide a clear regulatory framework for the custody of crypto assets.' The public comment period will remain open for 60 days after the SEC's proposing release is published in the Federal Register.