SEC Proposes Rules to Clear Up How Advisers and Funds Can Hold Crypto

In brief

• The SEC proposed a tailored framework for how registered investment advisers and regulated funds can custody crypto, seeking to clarify which arrangements satisfy the "qualified custodian" standard that has long kept firms hesitant to offer digital-asset strategies.
• The plan would permit self-custody under certain conditions, allow state trust companies to serve as custodians, and update audit and broker-dealer custodial rules.
• It's the latest in the SEC's post-Clarity Act build-out, alongside the innovation exemption and Regulation Crypto Assets.

The Securities and Exchange Commission is moving to settle one of the thorniest questions in institutional crypto: how professional money managers are supposed to hold the assets.

The agency on Wednesday proposed a tailored framework governing how registered investment advisers and regulated funds can custody crypto, aiming to replace years of regulatory ambiguity with a clear compliance path.

Advisers are required to keep client assets with "qualified custodians" that meet strict safekeeping standards, but it has long been unclear which crypto arrangements satisfy that bar, leaving many firms hesitant to offer digital-asset strategies at all.