The Securities and Exchange Commission has proposed a new custody framework for investment advisers and regulated funds that would expressly address crypto assets while revising safeguards for more conventional holdings.
The plan would permit advisers and funds to use state-chartered trust companies as crypto custodians if specified conditions are met. It would also allow self-custody in limited circumstances, an acknowledgment that some digital assets do not fit neatly within the account structures used for stocks, bonds and cash.
At the same time, the commission is proposing changes to recordkeeping, reporting and safeguarding duties under the Investment Advisers Act and Investment Company Act. The package would redesignate the existing adviser custody rule and replace an earlier 2023 proposal that drew criticism for potentially making compliant crypto custody impracticable.
This is a proposed rule, not a binding change. Its eventual reach will depend on the final text after public comment, and the commission may revise or abandon parts of the package. The proposal nonetheless marks a notable shift in emphasis: it treats crypto custody as a problem to be governed within the federal securities framework, rather than leaving advisers to infer obligations from rules written for different markets.
The practical questions will concern control, loss protection, insolvency treatment and the circumstances in which a fiduciary may safely hold a private key. Those details will determine whether the proposal expands lawful access or merely moves compliance risk into a new set of definitions.
