The SEC proposes a crypto custody framework letting advisers and funds self-custody and use state trust companies

The US Securities and Exchange Commission has proposed a regulatory framework for the custody of crypto assets by registered investment advisers and regulated funds, under the Investment Advisers Act and the Investment Company Act.

The proposal would allow state-chartered trust companies to serve as custodians for client and fund crypto, and would permit advisers to self-custody crypto under limited conditions, including when no permitted custodian is available. Commissioner Hester Peirce clarified that this means advisers acting as custodians for client assets, not investors holding their own keys. It also updates rules on financial-statement audits for advisers and broker-dealer custody for funds.

Chairman Paul Atkins said current rules were crafted for a bygone era and have kept advisers on the sidelines of a multi-trillion-dollar asset class. Comments are due 60 days after publication in the Federal Register.

The proposal is the third pillar of the SEC's crypto build-out, alongside Regulation Crypto Assets and transfer-agent modernisation, after the Clarity Act stalled in the Senate.

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