SEC Proposes Changes to Adviser Custody Rules, Including New Cryptoasset Custody Framework

The changes would account for developments in the cryptoasset markets, modernize investment adviser custody rules, and formalize certain SEC staff guidance.

By Laura Ferrell, Aaron Gilbride, Mike Hart-Slattery, Jennifer Y. Tian, Jamie Lynn Walter, and Meghan Carey

On October 1, 2026, the Securities and Exchange Commission (the Commission or SEC) proposed a broad set of changes to the custody framework governing investment advisers (the Proposal).¹ These changes, which would impact the rules under the Investment Advisers Act of 1940, as amended (the Advisers Act), are intended to modernize custody regulations to account for cryptoassets,² market changes and practices, and industry feedback. While many of the changes simply reflect a codification of SEC staff guidance, the Proposal includes significant changes with respect to the custody of certain cryptoassets as well as new requirements and exceptions.

In this Alert, we discuss proposed changes to enable investment advisers to self-custody cryptoassets, allow advisers to maintain assets with State-chartered limited purpose trust companies (State trust companies) subject to specified conditions, and update the Advisers Act custody framework to address, among other areas, authorized trading, permitted auditors, audited financial statement requirements, and inadvertent custody.³