SEC Proposes Crypto Custody Rules for Advisers, Funds

Published October 4, 2026, 09:05 UTC

The US Securities and Exchange Commission (SEC) on October 1 proposed rules meant to spell out how registered investment advisers and regulated funds can hold crypto assets for clients.

What was proposed

The proposal is Release Nos. IA-7023 and IC-36353 (File No. S7-2026-35), titled "Adviser and Regulated Fund Custody Rules; Crypto Custody Rules." It applies to registered investment advisers and to regulated funds, namely registered investment companies and business development companies. Two features stand out.

Conditional "self-custody." The proposing release would let an adviser hold client crypto itself, but only after determining in writing, at the start and then every quarter, that no permitted custodian is available. The adviser would also need safeguarding expertise and systems, including private-key management and joint authorisation of transactions by at least two people. Other conditions include cybersecurity controls, an internal control report within six months and then annually, quarterly account statements to clients, and a written agreement to treat the assets as financial assets. Under the release's definition, an adviser that holds any part of the private keys would be treated as having self-custody. A law-firm summary adds that the adviser would have to be the only party holding the keys.

Commissioner Hester Peirce noted in her statement that the proposal uses "self-custody" to mean an adviser acting as custodian for its clients, not investors holding their own keys.

State trust companies. The proposal would add state trust companies as permitted custodians for crypto. Before engaging one, and annually after, the adviser or fund must have a reasonable basis to believe it is authorised by its state banking authority to provide crypto custody and has written policies to safeguard assets, according to Peirce.

What the officials said

In his statement, SEC Chairman Paul Atkins said the proposal would give advisers and funds "a compliant pathway where none existed before," replacing uncertainty created by custody rules written for an earlier era.

It is a proposal, not a rule

Nothing here is final. The proposing release says comments are due 60 days after the proposal is published in the Federal Register, and its dates section was still blank as of October 4, so the clock has not started. The SEC can change the proposal before adopting a final rule. The law-firm summary also notes that the traditional custody rules would be modernised without a transition period under the proposal.

Why it matters

Custody has been a practical hurdle for advisers and funds that want crypto exposure, because the existing rules limit which institutions may hold client assets. The proposal would add two routes, conditional adviser custody and state trust companies. Whether, and how much, that changes what institutions hold depends on the final rule. The release says the Advisers Act amendments would apply only to crypto assets that are funds or securities, and not every crypto asset meets that test. For background on how investors already gain exposure through funds, see What Is a Spot Bitcoin ETF?

What to watch

Watch for publication in the Federal Register, which starts the comment period, and for comments from custodians, asset managers and investor groups. More SEC proposals may follow: Atkins said "More regulatory proposals are on the horizon."

This article is news reporting and is not investment advice.

Sources

• SEC, Adviser and Regulated Fund Custody Rules; Crypto Custody Rules, proposing release IA-7023 / IC-36353 (Oct. 1, 2026)
• SEC, Statement by Chairman Paul Atkins on the custody proposal (Oct. 1, 2026)
• SEC, Commissioner Hester Peirce, "Roller Coaster Ride" (Oct. 1, 2026)
• SEC press release 2026-100, SEC Proposal Would Address How Investment Advisers and Funds Can Custody Crypto Assets (wire copy, Oct. 1, 2026)
• Croke Fairchild Duarte & Beres, SEC Proposes Crypto Custody Rules for Investment Advisers and Regulated Funds (law-firm summary, Oct. 2, 2026)