SEC Unveils New Crypto Custody Rules Amid Clarity Act Rejection

The U.S. Securities and Exchange Commission (SEC) has proposed new rules for crypto custody, aiming to provide clarity in a multi-trillion-dollar market. The proposal would allow investment advisers and regulated funds to hold client crypto assets when no permitted custodian is available.

The SEC's move comes after lawmakers blocked the Clarity Act, which aimed to distinguish between digital assets as securities, commodities, or payment stablecoins. Despite this setback, regulators are pushing ahead with rulemaking for the digital asset space.

SEC Chairman Paul S. Atkins said in a statement that the crypto asset market has grown significantly since 2008 and that the current rules have not kept pace. He emphasized the need for a clear regulatory framework to replace uncertainty created by outdated custody rules.

The proposed rules would also recognize blockchain records as part of compliance, subject to conditions, and permit state trust companies to act as custodians for client and regulated fund crypto assets.