SEC proposes new crypto asset custody rules: what it means

The US Securities and Exchange Commission has proposed new crypto asset custody rules for registered investment advisers and regulated funds. The document is not yet law: once published, it opens a 60-day public comment period.

The initiative aims to remove some of the uncertainty around holding digital assets. The existing rules were written for traditional securities and cash, so applying them to wallets, keys and blockchain assets often raised questions for asset managers and funds.

What the SEC is proposing

• update custody requirements for crypto assets held by advisers and regulated funds;
• allow self-custody in certain cases, subject to conditions;
• allow state trust companies to act as custodians if they meet the requirements;
• clarify record-keeping, examination and disclosure requirements.

A custodian is an organization that holds a client’s assets and is responsible for keeping them safe. In crypto this role is more complex than in an ordinary brokerage account: access is often defined by a private key, and losing the key can mean losing the funds for good.

Why it matters

Large funds can’t just buy an asset: they need clear procedures for custody, audits and the responsibilities of each party. Clear requirements could make the market easier to navigate for professional players. But that doesn’t mean cryptocurrencies will become less volatile or that the risk of bankruptcy, hacks or user error will disappear.

For an individual wallet owner, the news doesn’t create a new way to store coins. It mainly concerns regulated financial institutions in the US. Still, rules like these often become a reference point for infrastructure companies and for regulatory debates in other countries.

FAQ