The U.S. Securities and Exchange Commission has proposed new crypto asset custody rules for registered investment advisers and regulated funds, including conditional self-custody options and the ability for state trust companies to serve as custodians for certain client and fund crypto assets, SEC Chair Paul Atkins announced.

Atkins said the proposal is intended to close gaps in crypto asset custody under federal law by giving investment advisers and regulated funds a compliant way to safeguard digital assets. Existing custody requirements, he noted, were designed for traditional assets and have not kept pace with crypto markets. Because those requirements determine which entities and arrangements qualify for holding client assets, the proposal would define the operational options available to advisers and funds seeking to hold crypto on clients' behalf. He also indicated that additional crypto proposals are planned following Regulation Crypto Assets and the Innovation Exemption.

SEC Proposal Addresses Crypto Custody Gaps

According to Atkins, the crypto market has grown from a niche asset class following Bitcoin's launch in 2008 into a multi-trillion-dollar market. Custody rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, however, largely predate the internet.

Those regulations require advisers and funds to use permitted custodians to protect client assets against loss, theft, misuse, and misappropriation. That structure makes the availability of qualified custodial services central to whether advisers and funds can hold a given asset for clients — yet custodial services for newly developed crypto assets may take months to become available after deployment. The SEC's proposal seeks to address this gap through a crypto-specific custody framework, while also modernizing existing requirements for investment advisers and regulated funds that Atkins said have remained unchanged for decades.

Atkins Details SEC's Broader Crypto Framework

Atkins described the custody proposal as part of the commission's wider approach to crypto regulation, a sequence of actions that has moved from staff-level guidance to formal commission proposals. Among the steps he outlined:

• December 2025: SEC staff issued a no-action letter — staff guidance signaling it does not intend to recommend enforcement action under specified conditions — to the Depository Trust Company concerning its voluntary securities tokenization pilot.
• January 2026: Staff issued a statement outlining a tokenized securities taxonomy.
• Subsequently: The commission interpreted which crypto assets qualify as securities and when assets may cease being subject to investment contracts.
• April: SEC staff addressed broker-dealer registration implications for certain interfaces used to prepare tokenized securities transactions.
• August: The commission proposed Regulation Crypto Assets, covering certain investment contracts involving crypto assets.
• Most recently: The SEC introduced an Innovation Exemption to facilitate trading in tokenized national market system stocks.

More Crypto Regulatory Proposals Ahead

Atkins said the commission's efforts recognize blockchain's potential role in modernizing financial markets, adding that onchain markets should not be pushed offshore or forced into unsuitable regulatory models.

He noted that the SEC's work remains ongoing, with additional regulatory proposals expected. Atkins said he intends to continue supporting President Trump's goal of establishing the United States as the crypto capital of the world.

For firms and observers tracking the outcome, the custody framework remains a proposal rather than a final rule, so its operative requirements — including the conditions attached to self-custody and the eligibility scope for state trust companies — would be fixed only in whatever version the commission ultimately adopts.

His remarks were shared via his official X account: https://x.com/SECPaulSAtkins/status/2106091018030305716?s=20

Source: Cryptofrontnews