The U.S. Securities and Exchange Commission proposed revised custody rules that would create a compliance pathway for investment advisers and regulated funds holding crypto assets while modernizing custody requirements for traditional assets. The proposal revisits the SEC’s 2023 approach by permitting an adviser to self-custody crypto assets when it determines that no qualified custodian is available, subject to safeguards addressing the conflicts and operational risks involved. Self-custody safeguards would include custody expertise, cybersecurity protections, annual reviews, internal reporting, client account statements and disclosures. The proposal would also allow state-chartered trust companies to serve as crypto custodians under specified conditions. Broader changes would update when regulated funds may use broker-dealers as custodians, conditionally exclude authorized discretionary trading from the Investment Advisers Act custody rule and provide an independent verification exception for advisers whose custody arises solely from a standing letter of authorization.
U.S. Securities and Exchange Commission proposes conditional crypto self-custody and wider use of state-chartered trust companies
The U.S. Securities and Exchange Commission proposed allowing conditional adviser self-custody of crypto assets when no qualified custodian is available and permitting state-chartered trust companies to serve as crypto custodians. The package would impose operational safeguards and modernize broader custody rules for investment advisers and regulated funds.