The U.S. Securities and Exchange Commission has put forward new rules and amendments designed to give registered investment advisers and regulated funds a tailored framework for safeguarding certain crypto assets.

Announced on October 1, the proposal would allow advisers to hold eligible client crypto assets directly in narrow circumstances where no permitted custodian exists. It would also establish a pathway for state-chartered trust companies to serve as custodians for crypto assets held for clients and regulated funds.

SEC Chair Paul Atkins described the framework as a compliant pathway for crypto custody, aimed at closing gaps left by custody rules developed primarily for traditional financial assets. The measure sits within the agency's wider Project Crypto agenda, which spans crypto distributions, custody, trading and onchain financial markets. Because custody governs who may hold client assets and how, it is a foundational piece for any adviser or fund looking to offer crypto exposure to clients.

Adviser Self-Custody Remains Narrowly Drawn

An adviser could turn to the self-custody route only after concluding that no permitted custodian is available for the crypto asset in question. That conclusion would need to be reached before the adviser takes custody, then reexamined on a quarterly basis. That would make the self-custody determination a recurring compliance obligation rather than a one-time decision. The framework contemplates an adviser holding assets on behalf of clients rather than investors directly controlling their own wallets.

The amendments would not sweep in every crypto asset. Under the Advisers Act framework, they would cover crypto assets that are funds or securities, while for regulated funds the relevant requirements would extend to crypto assets classified as securities or similar investments.

The proposal also includes additional changes to existing adviser and regulated fund custody requirements, including provisions involving financial statement audits and broker-dealer custodial services.

State Trust Companies Gain a Custody Pathway

Under the framework, eligible state trust companies could become permitted crypto custodians. Before relying on one, an adviser or regulated fund would need a reasonable basis for determining that the company is authorized by the relevant state banking authority to provide crypto custody.

The custodian would likewise be required to maintain written policies and procedures designed to protect crypto assets and related cash against theft, loss, misuse and misappropriation. Those determinations would be reassessed annually.

Broadening the roster of available custody providers speaks to one of the practical problems surrounding crypto investment products, where traditional qualified custodians may not support newly issued assets or the technology needed to safeguard them.

SEC Presses Ahead With Crypto Rulemaking

Custody is the latest component of a wider regulatory program the SEC has advanced during 2026. In August, the Commission proposed new crypto fundraising rules through Regulation Crypto Assets, creating tailored offering pathways for certain investment contracts involving crypto assets. In September, it followed with a five-year Innovation Exemption covering qualifying onchain trading of tokenized U.S.-listed stocks, alongside temporary relief for certain liquidity providers. Taken together, the initiatives line up with the distribution, trading and custody components the agency has grouped under Project Crypto.

The crypto custody rules remain a proposal and have not entered into force. Public comments will remain open for 60 days after the proposing release is published in the Federal Register. The comment window is the next procedural step in the rulemaking, and any final rule would require further Commission action before taking effect; until then, advisers and funds remain subject to existing custody requirements.

The full proposal is detailed in an SEC press release, with additional remarks from Atkins in his accompanying statement.

This article draws on reporting by Crypto Adventure.