Crypto · updated 2h ago · 3 min read
U.S. SEC Proposes Crypto Custody Rules Allowing Limited Self-Custody for Advisers
SEC proposes crypto custody rules allowing self-custody by investment advisers under defined safeguards. Certain state fiduciaries could serve as crypto custodians for advisers and funds.
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SEC custody proposal unveiled
The U.S. Securities and Exchange Commission proposed new rules to update how investment advisers and regulated funds hold crypto assets, including a custody framework that would give advisers and funds “a compliant pathway where none existed before.”
SEC Chair Paul Atkins said the SEC’s proposal responds to a gap created by custody rules “crafted for a bygone era,” and he framed the effort as bringing regulation up to date with the crypto market’s growth since Bitcoin was launched in 2008.
The SEC’s proposal would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940, and it would define eligible entities for custody, recordkeeping, and federal disclosures for investment advisers and regulated funds.
The SEC also proposed a 60-day public comment period that would run after the proposal is published in the Federal Register, and the rulemaking would proceed even after lawmakers blocked the Clarity Act in a procedural vote.
The proposal would allow advisers and funds to hold crypto through self-custody only under limited circumstances, including when an adviser determines that no permitted custodian is available.
Self-custody and eligible custodians
The SEC’s self-custody concept would describe advisers acting as custodians for client assets, not investors directly controlling their own crypto, and it would say the adviser’s determination would be reviewed every quarter. The proposed framework would be designed “to protect the assets of advisory clients and regulated funds from loss, theft, misuse, and misappropriation,” and it would say the SEC would impose clearer recordkeeping and federal disclosures. The SEC would allow crypto assets to be held in self-custody under certain circumstances and would permit state trust companies to serve as custodians for client and regulated fund crypto assets.
The SEC’s proposed framework would be designed “to protect the assets of advisory clients and regulated funds from loss, theft, misuse, and misappropriation,” and it would say the SEC would impose clearer recordkeeping and federal disclosures. The Block would say the SEC’s announcement came as both the SEC and Commodity Futures Trading Commission accelerated efforts to establish crypto regulations after the Clarity Act failed to pass the Senate, and it would quote Atkins saying “More regulatory proposals are on the horizon.”
What changes for markets
The SEC’s proposed custody framework would expand investor choice by eliminating barriers that restrain an adviser’s ability to provide crypto-related investment advice, and it would allow regulated funds to offer clients a wider range of crypto-asset-related investment strategies. The SEC would be seeking to amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940 to update requirements including financial statement audits for registered investment advisers and broker-dealer custodial services for regulated funds. The SEC’s proposed crypto custody rule may allow registered investment advisers to directly hold Bitcoin and other cryptocurrencies for their clients, and it would tie the potential impact to advisers managing “over $100 trillion.”
The SEC withdrew a 2023 proposal on custodial safeguards on June 12, 2025, leaving a gap until the new proposal. The SEC’s announcement would come as both the SEC and Commodity Futures Trading Commission accelerated efforts to establish crypto regulations after the Clarity Act failed to pass the Senate, and it would quote Atkins saying “More regulatory proposals are on the horizon.”