Key facts
- The SEC proposed rules to clarify crypto custody for investment advisers and funds.
- The proposal addresses the 'qualified custodian' standard for digital assets.
- Self-custody would be permitted under specific conditions.
- State trust companies could act as crypto custodians.
- The rules aim to increase investor access to crypto strategies.
The U.S. Securities and Exchange Commission (SEC) has proposed new rules aimed at clarifying how registered investment advisers and regulated funds can hold cryptocurrencies. This initiative seeks to resolve ambiguity surrounding the 'qualified custodian' standard, a key hurdle that has previously made firms hesitant to engage in digital-asset strategies.
The proposal, issued under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, outlines several key changes. It would allow for crypto assets to be held in self-custody under specific conditions, recognize state trust companies as eligible custodians for client and fund crypto holdings, and update existing rules concerning financial-statement audits for advisers and broker-dealer custodial services for funds.
SEC Chairman Paul Atkins stated that the crypto asset market has evolved significantly since Bitcoin's inception, growing into a multi-trillion-dollar asset class. He noted that the agency's existing rules, crafted for a different era, have not kept pace, and the new proposal aims to replace regulatory uncertainty with a clear compliance path. The ultimate goal is to broaden investor access to crypto strategies by removing existing barriers.