SEC proposes crypto custody rules for advisers and funds: self-custody only when no custodian will hold the token

The Securities and Exchange Commission on Thursday proposed rules that would, for the first time, set out how registered investment advisers and regulated funds can hold crypto assets for clients. The proposal would let state-chartered trust companies serve as crypto custodians and, under conditions, allow advisers and funds to hold crypto themselves. Chairman Paul Atkins said it would give advisers and funds "a compliant pathway where none existed before." Comments are open for 60 days after the release is published in the Federal Register.

This is the custody item we flagged last month while it was sitting at the White House regulatory office. It is now a formal proposal, not yet a rule.

The two main changes

State trust companies. Today an adviser using a state trust company has to work through a fact-specific legal analysis of whether it counts as a "bank," the SEC's fact sheet says. The proposal would allow them directly, provided the adviser or fund, before hiring one and every year after, confirms the company is authorised by its state banking regulator to hold crypto, reviews its written safeguarding procedures, its latest audited financial statements and its latest internal control report, and the client assets are kept separate from the trust company's own.

Self-custody. An adviser could hold a client's crypto itself, and a fund could do so through its adviser, but only if a long list of conditions is met.

What the headline leaves out

"Advisers can self-custody crypto" is the easy summary, and it overstates what is proposed. The first condition is that the adviser must determine that no permitted custodian is available to hold that specific asset, before taking custody and again every quarter. If a qualified custodian will hold it, self-custody is not an option.

In practice that points the self-custody route at newer and smaller tokens. The SEC itself notes that existing custodians "may not yet offer custodial services for nascent or novel assets." For the large, established coins that custodians already support, the proposal changes little for an adviser except adding state trust companies to the list of places they can go.

What self-custody would cost an adviser

For a small registered investment adviser, the conditions are an operating commitment, not a box to tick. Under the proposal the adviser would have to:

• document its expertise in safeguarding each crypto asset it holds;
• require at least two people to authorise any transaction, and manage private keys under written systems reviewed at least annually;
• keep each client's assets in addresses that hold only that client's crypto;
• get an internal control report from an independent public accountant within six months of first taking custody, and every year after;
• send each affected client an account statement at least quarterly, and sign a written agreement treating each asset as a "financial asset" for state-law protection.

For a fund, the board would also have to review the adviser's no-custodian report every quarter and decide each year that the asset would get reasonable care in the adviser's hands.

The same package has a cost cut that applies to all advisers, not only crypto ones: it would drop the requirement that accountants doing custody-rule work be registered with and inspected by the PCAOB. For a small firm that already pays for a surprise exam or audit, that could widen the pool of accountants it can hire.

What to watch

The comment period starts on publication in the Federal Register. The proposal also changes Form ADV and Form N-CEN to collect data on crypto custody and tokenized fund shares, which will eventually show how many advisers actually take the self-custody route. Live prices are on our crypto prices page.

Sources: U.S. Securities and Exchange Commission press release and fact sheet, Oct. 1, 2026. This is market information, not investment advice.