SEC Seeks Expanded Crypto Custody Options for State Trusts

The US Securities and Exchange Commission (SEC) has proposed allowing investment advisers to self-custody client cryptocurrency when no qualified custodian is available. This move aims to expand custody options for state trust companies, which can hold digital assets on behalf of clients.

According to the proposal, this change will provide an alternative to traditional qualified custodians, such as banks or specialized financial institutions, which are often required to hold and manage client cryptocurrency. However, in situations where no qualified custodian is available, investment advisers would be able to self-custody client crypto.

The SEC's proposal seeks to adapt to the growing demand for digital asset custody solutions, particularly among state trust companies. By allowing these entities to take on a more significant role in cryptocurrency storage and management, the regulator hopes to enhance the overall efficiency of the financial system.