SEC moves to clear custody hurdle for advisers offering crypto
Custody requirements have kept some investment advisers from offering certain crypto to clients, a regulatory hurdle the SEC’s proposal could remove.
Asanat Analysis — Why it matters
The SEC's custody proposal addresses a structural bottleneck that has fragmented the institutional crypto market. Advisers managing traditional assets face strict custodial standards under the Investment Advisers Act; crypto's nascent custody infrastructure created legal ambiguity, forcing many to exclude digital assets entirely. Clearing this hurdle signals regulatory acceptance that qualified custodians can meet fiduciary standards for crypto holdings—a prerequisite for meaningful adviser adoption.
This removes a gatekeeping mechanism that benefited early movers (Coinbase Custody, Fidelity Digital Assets) while excluding smaller advisers. Broader adviser participation typically expands institutional inflows and reduces retail-driven volatility. However, the proposal's specifics matter enormously: if custody standards remain high or limited to major custodians, concentration risk increases; if they democratize, fragmentation risk rises. The move also presages SEC approval frameworks for spot crypto ETFs and other institutional vehicles, suggesting a broader recalibration of the agency's asset-class stance.