SEC Proposes New Crypto Custody Rules for Investment Advisers and Funds

The Securities and Exchange Commission has put forward new rules and amendments aimed at establishing a tailored custody framework for crypto assets held by registered investment advisers and regulated funds, including registered investment companies and business development companies.

The proposal represents the agency's most direct attempt to impose structured oversight on how investment professionals handle digital assets on behalf of clients, an area that has remained a regulatory gray zone as crypto markets have grown in scale and complexity.

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Under existing rules, investment advisers are generally required to keep client assets with a qualified custodian. The new proposal would extend and adapt those requirements specifically to the unique characteristics of crypto assets, which present novel challenges around ownership verification, safekeeping, and loss prevention that differ substantially from traditional securities.

Regulated funds, which operate under strict fiduciary and compliance obligations, would also fall under the proposed framework. The SEC's move signals a broader effort to integrate digital asset holdings into the established architecture of investor protection that governs conventional securities markets.

The proposal is subject to a public comment period before any final rules are adopted, giving industry participants and other stakeholders an opportunity to weigh in on its scope and implementation. Continue reading at Press Releases.