SEC Proposes New Crypto Custody Rules for Advisers and Regulated Funds

SEC proposes new crypto custody rules covering self-custody, state trust companies, crypto investment advice, and regulated

The U.S. Securities and Exchange Commission has proposed new rules that would establish a framework for how investment advisers and regulated funds can custody crypto assets, including allowing self-custody under certain conditions.

The proposal, announced on Oct. 1, 2026, would also allow state trust companies to serve as custodians for crypto assets held by clients and regulated funds. According to Coin Bureau, the changes could also remove regulatory barriers that currently limit advisers' ability to provide crypto-related investment advice. The SEC said the proposal is intended to modernize custody requirements under the Investment Advisers Act of 1940 and Investment Company Act of 1940.

SEC Proposal Expands Crypto Custody Options

Under the proposed framework, investment advisers and regulated funds would be permitted to self-custody crypto assets in certain circumstances and subject to specific conditions.

The proposal would also recognize eligible state trust companies as custodians for client and regulated fund crypto assets. The SEC said the expanded options are intended to address limitations in the existing custody framework, particularly where qualified custodians may not have the technical capability or availability to support particular crypto assets.

SEC Chairman Paul Atkins said the existing custody framework was designed around traditional assets and has not kept pace with the development of crypto markets.

In a statement accompanying the proposal, Atkins said parts of the custody rules “predate the internet.” He also said the proposal would provide advisers and funds with “a compliant pathway where none existed before.”

The proposal does not establish unrestricted self-custody. SEC Commissioner Hester Peirce noted that the proposed adviser self-custody framework would apply under limited circumstances and require an adviser to determine that no permitted custodian is available for the crypto asset.

Changes Could Broaden Crypto Investment Advice

The SEC proposal would also remove regulatory barriers that the agency says inhibit investment advisers from providing crypto-related investment advice.

For regulated funds, the proposed changes would allow access to a wider range of crypto asset-related investment strategies. The agency said the revisions are intended to update custody rules to reflect current industry practices while maintaining requirements designed to protect client and fund assets.

The proposed framework forms part of a broader series of crypto-related initiatives from the SEC in 2026. The agency has separately proposed Regulation Crypto Assets, which would create a tailored securities offering regime for certain investment contracts involving crypto assets.

Public Comment Period to Run for 60 Days

The custody proposal is not yet 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. The commission will consider comments before deciding whether and how to finalize the rules.

For now, the proposal represents the SEC's latest attempt to establish specific custody requirements for crypto assets within the existing regulatory markets framework. Its final provisions will depend on the rulemaking process and feedback submitted during the 60-day comment period.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.

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