SEC Proposal on Crypto Custody Compliance

The SEC has proposed new regulations to clarify how investment advisers and funds can hold crypto assets, moving away from past ambiguity by allowing state trust companies as custodians and setting strict conditions for self-custody.

The top 3

  1. State Trust Companies as Eligible Custodians: The proposal formally allows investment advisers to utilize state-chartered trust companies as qualified custodians for client crypto assets, providing a regulated bridge for institutional involvement.
  2. Strict Conditions for Self-Custody: Under the new framework, advisers who choose to self-custody assets must undergo rigorous independent public accountant audits and meet high standards for protecting client digital keys.
  3. Ending Years of Regulatory Ambiguity: SEC Chair Gary Gensler stated that the rule is designed to ensure advisers provide the same level of asset protection for crypto as they do for traditional securities. Gary Gensler

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