SEC Proposes Crypto Custody Rules: How New Regulations Could Unlock Institutional Bitcoin Adoption

SEC Crypto Custody Proposal Could Expand Institutional Bitcoin Access Beyond ETFs

On October 1, 2026, the U.S. Securities and Exchange Commission proposed new rules and amendments under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. The proposal addresses how registered investment advisers and regulated funds, registered investment companies, and business development companies may custody crypto assets that qualify as funds or securities. Chairman Paul S. Atkins stated that existing rules have not kept pace with a market that has grown into a multi-trillion-dollar asset class since Bitcoin’s emergence in 2008. The framework aims to replace regulatory uncertainty with compliant pathways, including limited self-custody and expanded use of state trust companies. Public comments remain open for 60 days after Federal Register publication. This proposal arrives amid sustained institutional interest in Bitcoin. Bitwise’s September 2026 Institutional Crypto Adoption Report, based on interviews with senior professionals at 15 major entities, including endowments, pensions, and sovereign wealth funds, found that none reduced crypto allocations during a roughly 50% market drawdown from late 2025 into mid-2026; several increased exposure.