SEC Revives Cryptocurrency Custody Rule Proposal
The US Securities and Exchange Commission (SEC) has revived its push for a new custody rule that will impact how investment advisers handle client cryptocurrency. This move is not surprising, as the regulator has been working on a revised version of the proposal since it was shelved in 2023.
The previous attempt to narrow down where advisers could store client crypto assets failed due to operational and legal issues. Now, the SEC is trying again with an updated proposal that remains largely unknown, causing uncertainty for compliance teams.
Custody rules are critical for investment advisers as they determine which platforms can legally hold client funds, how often those assets must be audited, and whether advisers can use crypto-native infrastructure without triggering enforcement risk. A rewritten rule could redraw these lines just as institutions begin moving tokenized products into production.