U.S. SEC maps out crypto custody in new proposal that furthers its digital assets agenda
The U.S. SEC has proposed a new regulatory framework for crypto asset custody, aiming to modernize rules for investment advisers and funds. The proposal clarifies requirements for holding digital assets and auditing practices, while allowing for limited self-custody and state-chartered trust involvement.
Why it matters
This move provides a long-awaited legal pathway for institutional investors to enter the crypto market, potentially increasing mainstream adoption and market stability.
The 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 — and replacing the grey of uncertainty created by custody rules crafted for a bygone era,” said SEC Chairman Paul Atkins in a statement .
The SEC’s new approach would clarify what kinds of companies can properly hold crypto assets and how investment advisers and regulated funds need to keep records and make federal disclosures. It also offers new clarifications of industry practices and auditing requirements.
Atkins said that existing custody rules "were designed to protect the assets of advisory clients and regulated funds from loss, theft, misuse, and misappropriation," but they only consider "the custody and safekeeping only of traditional assets — an untenable situation in the 21st century."
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