The U.S. Securities and Exchange Commission proposed new rules on October 1 that would create a compliant framework for registered investment advisers and regulated funds to custody crypto assets directly, addressing a regulatory gap that has pushed institutional crypto exposure toward indirect structures such as futures-based products and trusts.
The proposal amends custody requirements under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, covering mutual funds and business development companies as well as advisers. It would permit regulated funds and advisers to use broker-dealer custodial services for crypto assets, authorize state trust companies to act as qualified custodians, and allow conditional self-custody under specified safeguards. The SEC also proposed modernizing financial-statement audit requirements for funds holding crypto assets, according to the commission's own announcement.
SEC Chairman Paul Atkins said the framework is intended to provide "a compliant pathway where none existed before," pointing to custody rules that predate the existence of digital assets as an asset class advisers might hold on clients' behalf.
The rules are a proposal, not a final rule. They are open for public comment for 60 days following publication in the Federal Register, and the SEC could revise or abandon elements of the framework before any final adoption.
The proposal follows a September 17 SEC Innovation Exemption that cleared a path for on-chain trading of tokenized stocks, part of a broader pattern this year of the commission working through discrete pieces of digital-asset market structure — trading venues, exemptive relief, and now custody — rather than a single comprehensive rulemaking. For institutional allocators, custody has been one of the more persistent barriers to direct crypto holdings: without a clear, compliant custodian framework, many advisers and funds have avoided the asset class entirely or accessed it only through wrapped products. A finalized version of this proposal would remove that specific obstacle, though the 60-day comment window means any practical effect is still months away at the earliest.