SEC Proposes Crypto Custody Rules for Advisers, With Limits

The United States Securities and Exchange Commission proposed rules on 1 October 2026 that would give registered investment advisers and regulated funds a defined framework for holding crypto assets, including limited self-custody and state trust companies as custodians. The SEC said in its proposal announcement that the rules amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940, which were written for traditional assets.

Self-custody, but only where no custodian exists

Under the proposal, an adviser could hold client crypto itself only after establishing that no permitted custodian is available for each asset, and would have to reassess that determination quarterly. If a custodian becomes available, the assets would have to move across as soon as reasonably practicable, the proposal states.

Self-custody would come with conditions: safeguards around private keys and cybersecurity, separation of each client’s holdings, and approval by at least two authorised individuals for any transfer of a self-custodied asset. Regulated funds could keep crypto with their adviser under the same requirements, with the fund’s board overseeing the arrangement. An SEC official said such cases would likely be unusual, perhaps a newly launched token that custodians do not yet support.