US SEC proposes rules for crypto custody by advisers and funds

Custody arrangements are becoming a key part of the infrastructure needed to connect crypto markets with established investment management structures.

The Securities and Exchange Commission (SEC) has proposed new rules and amendments aimed at creating a tailored framework for the custody of crypto assets by registered investment advisers and regulated funds. The proposal would update existing custody requirements under the Investment Advisers Act and Investment Company Act to better reflect current crypto market practices.

The proposed framework would allow crypto assets to be held in self-custody under certain circumstances and enable state trust companies to act as custodians for client and regulated fund assets. It would also update requirements covering financial statement audits and broker-dealer custodial services, while removing regulatory barriers that the SEC says can limit advisers’ ability to provide crypto-related investment advice.

SEC Chair Paul Atkins said the proposal is intended to provide advisers and funds with a compliant pathway for crypto custody, arguing that existing rules were developed around traditional assets and have not kept pace with the growth of the crypto market. The move forms part of the Commission’s broader effort to develop crypto-specific rules covering areas including tokenisation, trading, and investment products.