SEC Proposes New Custody Rules for Crypto Assets Held by Advisers
The SEC has unveiled proposed rules to govern how registered investment advisers and regulated funds must custody cryptocurrency assets under federal securities law.
The Securities and Exchange Commission has put forward a set of proposed rules and regulatory amendments designed to establish a tailored framework for the custody of crypto assets by registered investment advisers and regulated funds, including registered investment companies and business development companies.
The proposal marks a significant regulatory step as the SEC seeks to extend and adapt existing custody safeguards — long applied to traditional securities — to the distinct technical and operational challenges posed by digital assets. Crypto assets present unique custody risks, including issues around private key management and the absence of conventional custodial intermediaries, that existing rules were not built to address.
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Under the current regulatory landscape, investment advisers are already subject to the SEC's custody rule, which requires client assets to be held by qualified custodians. The new proposal would clarify how those obligations apply specifically to crypto holdings, potentially reshaping how advisers and funds structure their digital asset operations and select custodial partners.
The rulemaking reflects broader SEC efforts to bring the fast-growing digital asset industry within the boundaries of established investor protection requirements. By creating a framework specific to crypto custody, the agency aims to reduce the risk of loss, theft, or misuse of client assets held in digital form — concerns that have gained urgency following high-profile collapses in the crypto sector.
The proposal is subject to a public comment period before any final rules are adopted. Continue reading at Press Releases.
