SEC Proposes Letting Advisers and Funds Self-Custody Crypto Assets

“Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure. Unfortunately, our rules and regulations have not kept pace.”

Self-Custody and Trust Companies Face Safeguards

Eligibility for direct safekeeping would require quarterly reassessment, while security systems would undergo reviews at least annually. Transfers would need authorization by at least two people, and each customer’s holdings would occupy separate blockchain addresses. Investors would receive quarterly statements and sign agreements treating the tokens as financial assets under applicable state law.

State trust companies, institutions chartered by state banking regulators, could provide outside safekeeping subject to initial and annual checks of their authorization and security policies. Advisers or funds would also review audited financial statements and internal control reports, while customer holdings would remain separate from the custodian’s own assets.

State supervision already addresses asset separation, including under New York’s Department of Financial Services guidance issued Sept. 30, 2025, emphasizing separate accounting and segregation of customer crypto assets. Those safeguards apply to licensed virtual currency businesses and New York limited purpose trust companies engaged in crypto custody.