SEC Proposes Crypto-Asset Custody Framework for Registered Advisers and Funds

The U.S. Securities and Exchange Commission has proposed new rules and amendments to establish a tailored framework for custody of crypto assets by registered investment advisers and regulated funds. The proposal covers registered investment companies and business development companies, according to the SEC’s October 1 release.

The Commission said the proposal would update existing custody rules, address financial-statement audit requirements for registered advisers and broker-dealer custodial services for regulated funds, and permit self-custody in certain circumstances. It would also allow state trust companies to act as custodians for client and regulated-fund crypto assets under the proposed framework.

This is a proposal, not a final rule. The SEC said the public comment period will remain open for 60 days after the proposing release is published in the Federal Register.

Why it matters

For traders who access crypto exposure through advisers or regulated funds, custody rules affect how products can hold assets and what service providers may be used. A clearer framework could influence the range of crypto-related strategies that regulated firms may be able to offer, but it does not change current requirements until any rulemaking is completed.

The proposal is aimed at registered advisers and regulated funds, rather than creating a general custody rule for every crypto platform. Traders should distinguish between a regulated fund or adviser and a trading venue when assessing protections and counterparty risk.

What to watch next

Watch for the Federal Register publication, public comments and any later SEC vote on a final rule. The final text may differ from the proposal after the comment process.