SEC proposes new crypto custody rules for advisers and funds

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The US Securities and Exchange Commission (SEC) has proposed new rules that would expand how investment advisers and regulated funds can custody crypto assets.

The proposal would allow advisers to hold client crypto assets themselves in limited circumstances, including when no permitted custodian is available. It would also allow eligible state trust companies to provide crypto custody services.

The SEC said the changes aim to address gaps in existing custody rules, particularly where qualified custodians do not yet offer services for certain crypto assets. The proposal would also update custody, reporting and recordkeeping requirements for advisers and regulated funds.

The SEC stressed that the proposed “self-custody” arrangement would involve advisers acting as custodians for client assets, rather than investors holding their own crypto directly. Commissioner Hester Peirce said the provision would apply only under specific conditions, including a quarterly determination that no permitted custodian is available.