SEC Proposes Rules to Simplify Digital Asset Custody for Investment Advisers

The US Securities and Exchange Commission (SEC) has introduced new rules for the custody of digital assets, aiming to simplify the process for investment advisers and regulated funds. This move comes as the crypto market has grown to a multi-trillion-dollar asset class, with investors seeking exposure. SEC Chairman Paul Atkins stated that the proposal provides a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before. The new rules would allow state trust companies to act as custodians, and in limited cases, advisers themselves can hold crypto assets in self-custody. This change aims to modernize custody requirements that date back decades, which have limited advisers' ability to offer crypto-related investments. According to Jeff Ko, chief analyst at ViaBTC, this move could spur greater competition among crypto custodians, reducing both the cost and complexity of investing in digital assets. The proposal will be open for public comment for 60 days once it is published in the Federal Register, and the SEC has described it as part of a comprehensive approach to digital asset rules built under existing authority rather than new legislation. The Clarity Act, a sweeping crypto market structure bill, stalled in the Senate in September, leaving the SEC to fill the void piece by piece.