SEC Proposes New Rules for Crypto Custody by Investment Advisers
Written with artificial intelligence.
The U.S. SEC has introduced proposed regulations aimed at simplifying the process for investment advisers and regulated funds to hold cryptocurrencies. This initiative seeks to address outdated custody requirements and enhance the regulatory framework for digital assets.
Overview of Proposed Regulations
The U.S. Securities and Exchange Commission (SEC) has proposed new regulations that would ease the ability of investment advisers and regulated funds to hold cryptocurrencies for their clients. This announcement comes as regulators continue to develop a regulatory framework for the rapidly evolving crypto market, following a legislative effort that has stalled in Congress.
Key Changes in Custody Requirements
The proposed rules would create a customized framework for how registered investment advisers, investment companies, and business development companies custody crypto assets. Key changes include:
- Allowing crypto assets to be held in self-custody under specific conditions.
- Permitting state trust companies to act as custodians for clients' crypto assets.
These alterations aim to modernize existing custody rules that date back several decades and have constrained advisers' capacity to offer crypto-related investment options.
Regulatory Context and Implications
SEC Chairman Paul Atkins emphasized that the current regulations have not kept pace with the growth of digital assets, which represent a multi-trillion-dollar market. He stated that the proposal would provide a compliant pathway for the custody of crypto assets, filling a regulatory gap.
The proposal will be open for public comment for 60 days after its publication in the Federal Register. Analysts, like Jeff Ko from ViaBTC, suggest that these changes may enhance competition among crypto custodians and potentially lower the costs associated with investing in digital assets, as the institutional custody market has historically been dominated by a few providers.
Market Reaction
This regulatory push comes amid signs of renewed momentum in crypto markets, with Bitcoin experiencing a rebound of over 40% since its July low, as market sentiment improves following a volatile year. The recovery marks a significant shift from the downturn seen in late 2025 and early 2026.
This article is for information only and is not investment advice.