SEC Proposes Custody Rules for Crypto Assets Held by Advisers, Funds
The SEC has unveiled proposed rules creating a tailored custody framework for crypto assets held by registered investment advisers and regulated funds.
The Securities and Exchange Commission has put forward new rules and amendments designed to establish a dedicated framework governing how registered investment advisers and regulated funds may custody crypto assets under federal securities law, according to a commission announcement.
The proposal targets two broad categories of market participants: registered investment advisers, who manage client portfolios and are already subject to existing custody requirements, and regulated funds, which include registered investment companies and business development companies. The move signals the SEC's intent to bring digital asset custody practices in line with the safeguards that govern traditional securities.
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Current SEC custody rules were written before crypto assets emerged as a significant asset class, leaving gaps in how they apply to digital holdings. The proposed framework would address those gaps by spelling out specific conditions under which advisers and funds can properly hold or arrange for the holding of crypto assets on behalf of clients and investors.
The rulemaking reflects broader regulatory pressure to bring greater investor-protection standards to the crypto industry, where high-profile custody failures — including exchange collapses — have highlighted risks that existing rules were not designed to cover. By tailoring requirements rather than simply extending existing rules, the SEC appears to be acknowledging the distinct technical characteristics of blockchain-based assets.
The proposal will be subject to a public comment period before any final rule is adopted. Continue reading at Press Releases.
