SEC proposes rule letting advisers, funds self-custody crypto
Regulation & Gov ·
The agency's new framework would allow investment advisers and funds to hold digital assets directly or through state-chartered trust companies under specified conditions.
The Securities and Exchange Commission has proposed a rule change clarifying how investment advisers and funds can custody crypto assets, according to a press release posted to its newsroom. The proposal would permit self-custody in some cases and also open the door to state trust companies serving as qualified custodians, a shift from arrangements that have largely relied on federally regulated custodians.
The move comes as regulators push ahead on crypto custody policy after the Clarity Act was defeated in the Senate, according to The Block. With broader legislative efforts stalled, the SEC appears to be using its rulemaking authority to address custody questions that advisers and funds have raised for years about how to safely hold digital assets under federal rules.
Under the proposed framework, advisers and funds could self-custody crypto under specified conditions rather than being required to route holdings through a limited set of qualified custodians, a change described in reporting from Decrypt. The rule would also formally recognize state trust companies as eligible custodians for crypto assets held by advisers and funds, expanding the pool of entities able to service institutional crypto holdings beyond the current custodian landscape.
The proposal is now subject to a 60-day public comment period, a detail noted in coverage from Leviathan News. That window gives market participants, custodians, and legal commentators an opportunity to weigh in before the SEC moves toward a final rule. At least four distinct sources have covered the proposal since it was announced, pointing to broad interest in how the agency intends to formalize custody standards for regulated crypto investment vehicles.
What remains unresolved is how the specified conditions for self-custody will be defined in practice, and how state trust companies will be vetted or monitored under the new framework. It is also unclear how the proposal will interact with existing custody rules for traditional assets, or whether the SEC will adjust the rule in response to comments before finalizing it. Market participants are likely to watch for the exact text of the proposed rule and any signals about the timeline for adoption.