Key Takeaways
- • The SEC proposed a tailored framework for the custody of crypto assets by registered investment advisers and regulated funds (registered investment companies and business development companies), according to the SEC.gov press release dated October 1, 2026.
- • The proposal would permit crypto assets to be held in self-custody under certain conditions, and would allow state trust companies to serve as custodians for client and regulated fund crypto assets.
- • Under the proposal, an adviser could self-custody a client's crypto asset only if it determines in writing, before taking custody, that no permitted custodian is available, subject to significant conditions.
- • SEC Chairman Paul S. Atkins said the proposal gives advisers and funds "a compliant pathway where none existed before."
- • The proposed rules would amend requirements under the Investment Advisers Act of 1940 and Investment Company Act of 1940, including financial statement audits for advisers and broker-dealer custodial services for regulated funds. A 60-day public comment period opens after publication in the Federal Register.
Summary
The Securities and Exchange Commission proposed new rules and amendments creating a tailored framework for the custody of crypto assets by registered investment advisers and regulated funds, which include registered investment companies and business development companies, according to an SEC press release dated October 1, 2026. The proposal aims to modernize custody rules and expand investor choice by removing regulatory barriers that limit advisers' ability to provide crypto-related investment advice, and would allow regulated funds to offer clients access to a wider range of crypto asset-related investment strategies.
SEC Chairman Paul S. Atkins said in a statement that the crypto asset market has grown from a niche into a multi-trillion-dollar asset class since the advent of Bitcoin in 2008, and that existing rules had not kept pace. He described the proposal as replacing the uncertainty created by custody rules written for an earlier era with a clear regulatory framework.
According to coverage of the proposal, self-custody by advisers is permitted only under significant conditions. Per one summary of the text, an adviser could self-custody a client's crypto asset only if it determines in writing, before taking custody and at least periodically thereafter, that no qualified custodian is available. The proposal would also codify the treatment of state trust companies as permissible custodians.
The proposed amendments would also update a number of requirements under the Investment Advisers Act of 1940 and Investment Company Act of 1940, including financial statement audit requirements for registered investment advisers and broker-dealer custodial services for regulated funds. The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register. Full details of the conditions and the final text were not available in the sources reviewed.
SEC Chairman Paul S. Atkins said in a statement that the crypto asset market has grown from a niche into a multi-trillion-dollar asset class since the advent of Bitcoin in 2008, and that existing rules had not kept pace. He described the proposal as replacing the uncertainty created by custody rules written for an earlier era with a clear regulatory framework.
According to coverage of the proposal, self-custody by advisers is permitted only under significant conditions. Per one summary of the text, an adviser could self-custody a client's crypto asset only if it determines in writing, before taking custody and at least periodically thereafter, that no qualified custodian is available. The proposal would also codify the treatment of state trust companies as permissible custodians.
The proposed amendments would also update a number of requirements under the Investment Advisers Act of 1940 and Investment Company Act of 1940, including financial statement audit requirements for registered investment advisers and broker-dealer custodial services for regulated funds. The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register. Full details of the conditions and the final text were not available in the sources reviewed.
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