SEC Proposes New Custody Rules for Crypto Assets Held by Advisers
The SEC has put forward a tailored framework governing how registered investment advisers and regulated funds must custody cryptocurrency assets.
The Securities and Exchange Commission has proposed new rules and amendments designed to establish a structured framework for how registered investment advisers and regulated funds — including registered investment companies and business development companies — must handle the custody of cryptocurrency assets under federal securities law.
The proposal signals a significant regulatory step as the SEC moves to close gaps in existing custody rules that were written before digital assets became mainstream financial instruments. Current custody requirements were not designed with the technical and operational complexities of crypto holdings in mind, creating ambiguity for advisers managing client funds that include digital assets.
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By targeting registered investment advisers and regulated funds specifically, the SEC is focusing on entities already subject to its oversight, rather than attempting to broadly regulate the crypto industry at large. The tailored approach suggests regulators are seeking workable compliance pathways rather than outright prohibition, though the specifics of any final rule would depend on the outcome of the public comment process.
The rulemaking reflects ongoing tension between the rapidly evolving digital asset market and a regulatory apparatus built for traditional securities. Industry participants and legal observers have long called for clearer guidance on how advisers can satisfy their fiduciary and compliance obligations when holding crypto on behalf of clients.
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