SEC proposes crypto custody rule allowing self-custody and state trust custodians
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The U.S. Securities and Exchange Commission proposed a rule on Thursday to clarify how investment advisers and funds can custody crypto assets. The proposal would allow self-custody under certain conditions and permit state-chartered trusts as custodians. It opens a 60-day public comment period.
Key Facts
- The SEC proposed the rule on Thursday under the Investment Advisers Act of 1940 and the Investment Company Act of 1940.
- The proposal would allow self-custody of crypto assets under certain circumstances and permit state-chartered trusts as custodians.
- The public has 60 days to submit comments before the SEC decides on finalizing the rule.
- SEC Chairman Paul Atkins said the proposal would provide a clear regulatory framework and help make the U.S. the 'crypto capital of the world.'
- The proposal comes a day before Commissioner Hester Peirce, who led the Crypto Task Force, exits the agency on Friday.
Custody Framework
The proposed rule clarifies which arrangements satisfy the 'qualified custodian' standard under federal securities laws. It would allow self-custody of crypto assets under certain circumstances and permit state-chartered trusts to serve as custodians. The rule also updates recordkeeping, auditing, and broker-dealer custodial requirements for crypto. SEC Chairman Paul Atkins said existing custody rules were designed for traditional assets and are 'an untenable situation in the 21st century.'
Regulatory Context
The proposal is the SEC's latest effort to fill the regulatory void after the Clarity Act failed to pass the Senate last month. The SEC has championed cryptocurrency during President Trump's second term, and Atkins said the proposal helps make the U.S. the 'crypto capital of the world.' The proposal comes a day before Commissioner Hester Peirce, an outspoken crypto advocate, leaves the agency after eight years. With the custody rule, the SEC has now addressed every major topic on the crypto agenda set by Atkins.