SEC Proposes New Crypto Custody Rules for Investment Advisers and Funds

Highlights:

• SEC proposed new crypto custody rules allowing registered advisers and funds more options for safeguarding digital assets.
• The proposal could permit limited self-custody and allow state trust companies to hold certain crypto assets for clients.
• Public comments remain open for 60 days after publication before the SEC considers whether to finalize changes.

The U.S. Securities and Exchange Commission (SEC) has proposed new rules for how registered investment advisers and regulated funds can hold crypto assets. Announced on October 1, the proposal would create a tailored crypto custody framework under federal securities laws and give firms more options for safeguarding digital assets.

According to the SEC’s October 1 announcement, the changes are designed to modernize custody requirements and remove regulatory barriers that can limit advisers from providing crypto-related investment advice. The proposal would also cover regulated funds, including registered investment companies and business development companies.

TODAY 🚨: The Commission proposed new rules and amendments to provide a tailored framework for the custody of crypto assets for registered investment advisers and regulated funds, i.e. registered investment companies and business development companies. pic.twitter.com/MP16NmQ6og

— U.S. Securities and Exchange Commission (@SECGov) October 1, 2026

SEC Proposal Opens Path for Crypto Self-Custody

One major change would let advisers and funds use self-custody for crypto assets in certain situations. The SEC also wants to allow state trust companies to hold crypto for clients and regulated funds.

Custody simply refers to how firms hold and protect assets for investors. Current SEC rules were mainly built around traditional financial assets, so crypto has created new challenges that older custody rules do not fully address. SEC Chairman Paul Atkins said the market has changed significantly since Bitcoin appeared in 2008, but regulation has not kept pace.

“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,” Atkins said. Atkins said the proposal would give investment advisers and funds a clearer regulatory path for crypto custody where existing rules have created uncertainty.

SEC Seeks to Modernize Adviser and Fund Custody Rules

The proposed changes fall under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. Along with crypto-specific provisions, the SEC wants to update several broader custody requirements for registered advisers and regulated funds.

The proposal also covers financial statement audits for registered investment advisers and custody services provided by broker-dealers to regulated funds. The SEC said the changes would bring its rules closer to current industry practices and give regulated funds more flexibility to offer crypto-related investment strategies.

Still, the proposal would not give advisers and funds unrestricted freedom to hold crypto. The SEC would set clear conditions for crypto custody, including when firms could use self-custody. The SEC also explained how the rules would apply to different crypto assets. The adviser custody changes would cover crypto assets treated as funds or securities, while the Investment Company Act provisions would apply to crypto assets classified as securities or similar investments.

Public Comment Period Will Run for 60 Days

The proposal is now moving through the public feedback process. The SEC said its comment period will remain open for 60 days after the proposing release is published in the Federal Register. Market participants, investment firms and other interested parties can submit comments during that period before the SEC considers its next steps.

The crypto custody framework remains a proposal, not a final rule. If adopted, it would give registered investment advisers and regulated funds a defined federal framework for holding certain crypto assets while expanding the custody options available to them.