Securities and Exchange Commission Chair Paul Atkins has said that proposed crypto custody rules could establish clearer requirements for investment advisers and funds that deal with digital assets. The statement signals that the agency is actively working to define how regulated financial professionals should handle or safeguard crypto on behalf of their clients.

What Atkins Said About the Proposed Custody Rules

SEC Chair Paul Atkins publicly addressed the agency's work on crypto custody rules, saying the proposed framework would clarify what investment advisers and funds are expected to do when holding or arranging custody of digital assets. His statement was published through the SEC's official newsroom, the channel through which the agency releases speeches and statements from its leadership.

Custody, in this context, refers to how crypto assets are held or safeguarded on behalf of a client. The arrangement is comparable to a bank holding a customer's money: the rules would set out who is responsible for keeping those assets secure and what standards they must meet.

A Proposal, Not a Final Requirement

It is important to note that Atkins was referring to a proposed rule, not a final one. The SEC proposal has not been adopted, and the agency has not issued a binding requirement yet. This distinction matters for any adviser or fund currently evaluating its obligations.

Investment advisers — firms that manage client portfolios — and investment funds that hold crypto would be among the primary groups affected if the rules are finalized.

How Clearer Custody Requirements Could Affect Advisers and Funds

These firms face a practical question: who exactly is responsible for keeping client assets safe, and what does that responsibility require? Without clear rules, firms have had to make compliance decisions under uncertainty.

Proposed rules that clarify custody requirements would give those firms a defined framework against which to evaluate their operations. Clarity around custody helps companies understand whether they need a qualified custodian, what recordkeeping is expected, and how client assets must be segregated. A qualified custodian is a regulated financial institution — typically a bank, trust company, or registered broker-dealer — that meets defined standards for holding client assets.

The SEC has been refining its approach to crypto regulation across several areas. The agency was set to vote on a 400-page crypto regulation proposal earlier this year, a sign of how wide-ranging these regulatory efforts have become. A focused custody rule would address one specific but critical piece of that larger picture.

For an individual who holds crypto through a financial adviser or a fund, clearer custody rules would mean that the firm managing those assets has explicit guidance on how they must be protected. That differs from holding crypto directly on an exchange, where the customer bears the custody risk. That risk is not hypothetical: when prominent crypto platforms have failed in recent years, customers have often faced lengthy proceedings and uncertainty over how much of their holdings would be recovered. Formal custody standards are designed to keep client assets segregated from a firm's own balance sheet — the core protection this proposal would define for adviser and fund clients.

Why the SEC's Approach Matters Now

The SEC under Atkins has been working to replace enforcement-driven guidance with formal rulemaking. Earlier this year, the agency dismissed several crypto enforcement cases and acknowledged that prior crackdown efforts had gone too far. The custody proposal is part of that shift toward written, predictable rules.

The agency's custody requirements for advisers long predate the growth of crypto markets, and applying them to digital assets has raised practical questions about how holdings recorded on blockchain networks can be safeguarded to standards written for securities kept at traditional institutions. A dedicated crypto custody proposal is aimed at closing that gap.

The SEC has also been holding meetings to develop tailored crypto offering rules, suggesting that custody is one piece of a wider rulemaking effort currently underway at the agency. The work fits into the broader regulatory framework Atkins has been outlining since taking the chair role, which includes defining how digital assets fit into existing securities law.

What Comes Next

For advisers and funds, the next steps to watch are the formal release of the proposal text, any public comment period the SEC opens, and whether the agency announces a vote or final action. Those steps would follow standard SEC rulemaking procedure, under which a proposal is published for public feedback before the commission can adopt a final rule, and would be announced through the agency's official channels. The comment stage can also reshape the text itself: the commission can revise a proposal in response to industry feedback before adoption, so a final rule may differ from what was first proposed.

For investors who work with a financial adviser that includes crypto in their portfolio, or who invest through a fund holding digital assets, the rulemaking is worth following: clear custody rules would define the baseline protection an adviser or fund must provide for those holdings.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk.