SEC Proposes Rules to Simplify Crypto Custody for Investment Advisers

SEC Proposes New Rules for Crypto Custody

In a significant move towards reshaping the regulatory landscape for cryptocurrencies, the U.S. Securities and Exchange Commission (SEC) has announced a proposal that aims to simplify custody requirements for investment advisers and funds dealing with digital assets. This initiative comes at a time when the cryptocurrency market is re-emerging, following a tumultuous start to the year, with Bitcoin rebounding over 40% from its summer low.

A Modernized Framework

The new rules, revealed in a press release on Thursday, outline a comprehensive framework that focuses on how registered investment advisers, investment companies, and business development companies can manage the custody of cryptocurrencies. By targeting outdated regulations, the SEC seeks to eliminate barriers that have historically limited the capabilities of advisers to offer crypto-related investments.

According to SEC Chairman Paul Atkins, this revitalization is crucial as the existing regulations have not kept pace with the rapid growth of digital assets. “Today’s proposal would provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before,” Atkins stated.

Key Provisions of the Proposal

Under the proposed regulations, advisers could potentially hold crypto assets in self-custody, where circumstances permit. Additionally, state trust companies would be authorized to act as custodians for clients' crypto assets and regulated funds. These changes could expand the scope of investment strategies available to clients, enabling greater access to cryptocurrency-related opportunities.

Addressing Regulatory Gaps

This proposal reflects a broader strategy by U.S. regulators to fill the regulatory gaps in the cryptocurrency space, especially after the Clarity Act—a sweeping bill aimed at restructuring crypto regulations—encountered hurdles in Congress. The SEC intends to take advantage of its existing authority to address various segments of the market incrementally, tackling each regulatory challenge step by step.

Jeff Ko, chief analyst at blockchain service provider ViaBTC, remarked that the SEC is increasingly leveraging its power to resolve issues surrounding issuance, tokenization, trading exemptions, and, most recently, custody of digital assets. This responsive approach may enhance competition within the crypto custody sector, likely lowering costs and simplifying the investment process for institutional investors.

Market Dynamics and Future Outlook

The SEC's newly proposed rules come amid a resurgence in cryptocurrencies. After a prolonged downturn from late 2025 to mid-2026, the markets are witnessing renewed interest as investor confidence begins to rally. This renewed momentum may reflect a larger shift in market sentiment, potentially influencing regulatory adaptations moving forward.

As part of its protocol, the SEC will accept public comments for 60 days following the publication of this proposal in the Federal Register.