The SEC on Thursday proposed rules for how registered investment advisers (RIAs) and regulated funds can hold crypto. The goal is a compliant route for money managers who want crypto exposure, since today's custody rules weren't built for it.

What's the Scoop?

• New custodians: State-chartered trust companies could hold crypto for adviser clients and funds. That widens a field where qualified options have been thin for some assets.

• Limited self-custody: Advisers could hold client crypto themselves in certain cases, like when no approved custodian is available. As Commissioner Hester Peirce pointed out, this means the adviser acting as custodian, not individuals holding their own keys.

• 180 from 2023: Gensler's SEC once proposed custody changes that critics said would have boxed advisers out of crypto by limiting them to a short list of qualified custodians. a16z called that effort "illegal, infeasible, and dangerous," and it was later withdrawn.

• More to come: Comments stay open for 60 days once the proposal is published in the Federal Register, and Chair Paul Atkins says more proposals are on the way. It follows the SEC's innovation exemption and the CFTC's rulemaking filing last month, as regulators push ahead after the Clarity Act failed in the Senate.

• Big picture: With Clarity stalled, the crypto rulebook is now being written one agency proposal at a time. That's faster, but it's also less durable, since a future SEC can rewrite rules far more easily than Congress can repeal a law.