SEC proposes crypto custody framework as ninth federal action since August
The US Securities and Exchange Commission proposed a custody framework on Thursday (October 1) that would let registered investment advisers and regulated funds hold crypto assets, including through self-custody and state-chartered trust companies, for the first time under rules built specifically for the asset class. The proposal is the ninth US regulatory action on crypto since mid-August, a run that has moved from how tokens are sold to how they are held, even as Congress remains stalled on the market-structure bill that would settle jurisdiction between the SEC and CFTC.
- The SEC’s Oct. 1 proposal would permit crypto self-custody “under certain circumstances” and recognize state trust companies as custodians for client and fund assets.
- It is the ninth federal crypto action since Aug. 18, following the Senate’s 49-50 failed cloture vote on the CLARITY Act on Sept. 15, ten votes short of the 60 needed.
- The CFTC’s broader market-structure framework, covering secondary trading, has sat at the White House’s Office of Information and Regulatory Affairs since Sept. 17 with its text still unpublished.
- 60 days comment window on the SEC’s custody proposal once published in the Federal Register
- 49-50 Senate cloture vote on CLARITY Act, ten votes short of the 60-vote threshold
- 1.2% digital-asset allocation share in CoinShares’ August survey, first rise since the October 2025 selloff
The Securities and Exchange Commission said in its proposal that it wants to “modernize custody rules and expand investor choice” by removing barriers that currently keep advisers from offering crypto-related advice. The rules, proposed under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, would also update financial-statement audit requirements for advisers and broker-dealer custodial arrangements for regulated funds. Crypto Coin Show covered the earlier stage of this custody rule as the agency signaled the change was coming.
SEC Chairman Atkins Calls Rule a ‘Compliant Pathway Where None Existed Before’
SEC Chairman Paul Atkins framed the proposal as closing a gap that has existed since crypto moved from fringe asset to institutional holding. He said regulators had not kept pace with an asset class that has grown “from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure.”
Today’s proposal would provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before, and replacing the grey of uncertainty created by custody rules crafted for a bygone era.
Paul S. Atkins, SEC Chairman
The proposal is not final. Comments run 60 days from the proposing release’s publication in the Federal Register, a window roughly double the 30 days the agency gave on some earlier crypto proposals this cycle.
Self-Custody Provision Breaks From Decades-Old Qualified Custodian Rule
For registered investment advisers, custody of client assets has historically required a “qualified custodian,” typically a bank or registered broker-dealer, a standard written before crypto existed and widely seen as incompatible with how digital assets are actually held and transferred. The new framework would let advisers rely on self-custody “under certain circumstances” and would add state trust companies as an eligible custodian category, broad