SEC Proposes Crypto Custody Rules for Advisers and Funds

The U.S. Securities and Exchange Commission has proposed new rules governing how registered investment advisers and regulated funds custody crypto assets, an effort Chairman Paul Atkins said would replace “the grey of uncertainty created by custody rules crafted for a bygone era,” according to Cryptopotato. The proposal, issued under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, is designed to clarify which arrangements satisfy the “qualified custodian” standard that has long kept many firms from offering digital-asset strategies at all.

Atkins said the agency’s existing custody rules largely predate the internet and do not adequately address newer crypto assets. He also pointed to a practical bottleneck: custodial services for a crypto asset can take months to become available after launch, creating problems for advisers and funds trying to build strategies around those assets.

How the proposal fits into a wider SEC push

Atkins described the custody proposal as one element of a broader regulatory approach rather than a stand-alone measure, per Cryptopotato. He cited Commission staff actions that preceded it: a no-action letter to the Depository Trust Company in December 2025 regarding DTC’s voluntary securities tokenization pilot program, and a January 2026 staff statement on tokenized securities that laid out a tokenization taxonomy for the market.

Decrypt reported the custody plan as part of the SEC’s post-Clarity Act build-out, alongside an innovation exemption letting tokenized stocks trade on-chain and a proposed crypto-fundraising framework dubbed Regulation Crypto Assets. The same outlet noted staff had previously clarified that token buybacks do not by themselves make a crypto asset a security.

The reports converge on the core mechanics but differ in emphasis. PANews highlighted the self-custody conditions and the quarterly reassessment requirement and quoted Atkins saying the proposal would give advisers and funds a “compliance path that did not previously exist.” Decrypt focused on the qualified-custodian bottleneck and the proposal’s place in the agency’s wider rulemaking sequence. Cryptopotato framed the effort around the CLARITY Act’s failure to advance.

Why it matters

Advisers have long been required to keep client assets with qualified custodians meeting strict safekeeping standards, but it has been unclear which crypto arrangements clear that bar. That ambiguity kept many firms on the sidelines, effectively limiting investor access to digital-asset strategies. The proposal would widen the set of acceptable custody routes and give advisers and funds a defined compliance path where previously none was spelled out. It also signals that U.S. crypto rulemaking is proceeding through the agencies rather than waiting on Congress.

What to watch

The 60-day public comment period will open once the proposal is published in the Federal Register, after which the agency can revise the rules before any vote to adopt them. Comments submitted during that window, and any revisions the SEC makes in response, are the next concrete data points on how far the framework moves from proposal to final rule.

Sources: CryptoPotato, PANews, Decrypt