SEC Proposes Crypto Custody Framework for Advisers and Funds

The Securities and Exchange Commission on Sept. 30 proposed a tailored framework governing how registered investment advisers and regulated funds may custody crypto assets, aiming to replace years of regulatory ambiguity with a defined compliance path. The proposal would permit self-custody under certain conditions and allow state trust companies to serve as qualified custodians. Issued under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, the plan also updates rules on financial-statement audits for advisers and broker-dealer custodial services for funds. The SEC said the goal is to widen investor access to digital-asset strategies. "There's no greater risk than holding crypto on an exchange," SEC Chairman Paul Atkins said, adding that existing custody rules were "crafted for a bygone era." The proposal follows other SEC crypto actions, including an innovation exemption for tokenized stocks and a fundraising framework. A 60-day comment period opens upon Federal Register publication.