The U.S. Securities and Exchange Commission (SEC) announced a proposal on Thursday aimed at simplifying the process for investment advisers and regulated funds to custody cryptocurrencies. The move seeks to modernize long-standing regulatory frameworks that have historically created barriers for financial institutions looking to offer digital asset investments.
According to the SEC, the proposed rules would establish a tailored framework governing how registered investment advisers, investment companies, and business development companies handle crypto assets. Under specific circumstances, these entities would be permitted to engage in self-custody. Additionally, state trust companies would be eligible to serve as custodians for client and fund crypto holdings.
SEC Chairman Paul Atkins emphasized that current regulations had not kept pace with the rapid expansion of the digital asset sector, which has evolved into a multi-trillion-dollar market. “Today’s 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,” Atkins said.
The proposal is part of a broader effort by the SEC to develop a comprehensive crypto rulebook under its existing authority. This initiative follows the stall of the Clarity Act, a sweeping crypto market structure bill, in the Senate in September. The new rules, once published in the Federal Register, will be open for public comment for 60 days.
The regulatory development coincides with renewed momentum in crypto markets after a volatile start to the year. Bitcoin has rebounded more than 40% from its low in July, driven by improving risk appetite and revived demand for digital assets following a prolonged downturn that lasted from late 2025 through the first half of 2026.
Wait, Bitcoin rebounded 40% since July? I thought the market was still in a deep freeze from the 2025 downturn.
This is a welcome step, but it only applies to registered funds. What about smaller advisers and retail access?
I’m skeptical about the security risks. Are investment advisers really equipped to handle private keys without sophisticated infrastructure?
Self-custody is a huge shift. It shows the SEC finally recognizes that institutions need more control, not less.