SEC proposes crypto custody rules for investment advisers and funds

The US Securities and Exchange Commission proposed new custody rules on 1 October 2026 that would set out how registered investment advisers and regulated funds can hold crypto assets for clients. Regulated funds here means registered investment companies and business development companies.

What the proposal would change

According to the SEC, its current custody rules were written for traditional assets, and a permitted custodian may not be readily available for some crypto assets. The proposal would address that in two main ways.

First, advisers could hold a client’s crypto assets in self-custody, but only under conditions. The adviser would have to determine that no permitted custodian is available for the asset, both before taking custody and every quarter after. It would need documented safeguarding expertise, systems covering private key management, and joint authorisation of transactions by at least two people. Each client’s assets would sit in separate addresses on the crypto network, an independent accountant would report on the adviser’s controls within six months and yearly after that, and clients would receive statements at least quarterly. A regulated fund using self-custody would need its board to oversee the arrangement.

Second, advisers and funds could use state trust companies as custodians for crypto assets. They would have to check, before engaging one and every year after, that the trust company is authorised by its state banking regulator to hold crypto, has written safeguarding procedures, and has supplied its audited financial statements and internal control report. Client assets would have to be kept apart from the trust company’s own.

The package also updates the wider custody rules, for example removing older conditions on broker-dealer custody for funds and dropping the requirement that the accountants involved be registered with the Public Company Accounting Oversight Board.

SEC Chairman Paul S. Atkins said the proposal would give advisers and funds “a compliant pathway where none existed before”.

What it means for traders

The rules concern professional money managers, not retail trading accounts directly. If adopted, they would set the conditions under which advisers and funds offering crypto strategies can hold the underlying coins. For background on how regulated funds already give investors crypto exposure, see our guide to spot Bitcoin and Ether ETFs.

What happens next

This is a proposal, not a final rule. The comment period runs for 60 days after the proposing release is published in the Federal Register.