Key Takeaways
- • The U.S. Securities and Exchange Commission has proposed a new framework governing how crypto assets must be held in custody, with the rules directed at investment advisers and funds.
- • The proposal targets the custody arrangements that registered advisers and funds use for digital assets, a core operational and safekeeping issue for institutional allocators.
- • Managers holding or planning to hold crypto exposure should track the proposal's specific requirements as they are published.
Summary
The Securities and Exchange Commission has proposed a new crypto custody framework applicable to investment advisers and funds, according to a legal advisory published by Sullivan. The proposal addresses how digital assets must be safeguarded when held on behalf of clients and fund investors, an area where existing custody requirements have been applied unevenly to crypto assets.
For registered investment advisers and the funds they manage, custody rules determine who may hold client assets, how those assets must be segregated and verified, and what controls apply. Extending that framework to crypto assets would set baseline expectations for qualified custodians, asset segregation, and recordkeeping across the sector.
Further details, including the specific rule text, compliance timelines, and any comment period, were not available in the material reviewed for this summary. Readers should consult the SEC's release and counsel's analysis for the operative terms.
For registered investment advisers and the funds they manage, custody rules determine who may hold client assets, how those assets must be segregated and verified, and what controls apply. Extending that framework to crypto assets would set baseline expectations for qualified custodians, asset segregation, and recordkeeping across the sector.
Further details, including the specific rule text, compliance timelines, and any comment period, were not available in the material reviewed for this summary. Readers should consult the SEC's release and counsel's analysis for the operative terms.
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