SEC Proposes New Rules On Crypto Custody
Bitcoin Magazine SEC Proposes New Rules On Crypto Custody The regulator proposed new rules it said would help govern investment funds’ custody of crypto assets. This post SEC Proposes New Rules...
The regulator proposed new rules it said would help govern investment funds’ custody of crypto assets.
The U.S. Securities and Exchange Commission has proposed new rules to update how investment advisers and regulated funds hold assets, with a big focus on crypto.
In a statement Thursday, the Wall Street watchdog said it would allow advisers and funds acting through their advisers, to hold client crypto themselves, but only if no permitted custodian is available.
Regulators are pushing ahead with rulemaking for the digital asset space despite lawmakers blocking the Clarity Act last month.
JUST IN: 🇺🇸 SEC Chairman Paul Atkins releases a statement to address the custody of crypto assets. 👀"Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class" 🚀 pic.twitter.com/SbLR2HAeW1
The long-awaited legislation — a framework for distinguishing between digital assets that are securities, commodities or payment stablecoins — didn’t get the votes needed to advance.
“Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure. Unfortunately, our rules and regulations have not kept pace,” SEC Chairman Paul S. Atkins said in a statement.
“To that end, today’s proposal would provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before — and replacing the grey of uncertainty created by custody rules crafted for a bygone era.”
The regulator said in its proposed rules that records kept on a blockchain could count toward compliance, subject to conditions.
It added that it would allow use of state trust companies as custodians for client and regulated fund crypto assets, subject to conditions.
Lawmakers blocked the Clarity Act in a procedural vote last month. Regulators had said before the vote that regardless of whether the landmark legislation passed, they’d still start regulating the crypto industry.
The SEC before the vote sent a proposal to the White House aiming to “clarify the framework for the custody of crypto assets” for investment advisers and companies.
Pro-crypto Atkins said he would still work to make the U.S. the “crypto capital of the world” regardless of the landmark legislation getting through.
Asanat Analysis — Why it matters
The SEC's custody rules proposal addresses a structural gap that has constrained institutional crypto adoption. Current framework ambiguity has forced funds into improvised solutions—qualified custodians, bank partnerships, or self-custody arrangements—each carrying distinct regulatory and operational risks. Formalized custody standards would establish clearer guardrails for what constitutes compliant asset safeguarding, reducing friction for traditional asset managers entering crypto markets and potentially unlocking billions in institutional capital currently sitting on sidelines.
Historically, custody clarity has preceded major institutional inflows: gold ETFs required vault standards, derivatives required clearinghouse frameworks. The crypto sector lacks equivalent infrastructure codification. However, the proposal's scope matters critically—overly prescriptive rules could mandate expensive legacy banking infrastructure incompatible with crypto's decentralized settlement model, while toothless guidance leaves counterparty risk unaddressed. Market response will hinge on whether rules accommodate custody diversity (self-custody, multi-sig protocols, decentralized solutions) or entrench centralized intermediaries.