- The SEC proposed crypto custody rules for registered investment advisers and regulated funds, including conditional self-custody options.
- The proposal would allow state trust companies to serve as custodians for certain client and fund crypto assets.
- Atkins said the SEC plans additional crypto proposals after Regulation Crypto Assets and the Innovation Exemption.
SEC Chair Paul Atkins says the commission has proposed new rules to address gaps in crypto asset custody under federal law. The proposal aims to give investment advisers and regulated funds a compliant way to safeguard digital assets. Atkins said existing custody requirements were designed for traditional assets and have not kept pace with crypto markets.
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. However, custody rules under the Investment Advisers Act of 1940 and Investment Company Act of 1940 largely predate the internet.
These regulations require advisers and funds to use permitted custodians to protect client assets against loss, theft, misuse, and misappropriation. However, 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. It would also modernize existing requirements for investment advisers and regulated funds, which 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. In December 2025, SEC staff issued a no-action letter to the Depository Trust Company concerning its voluntary securities tokenization pilot.
In January 2026, staff issued a statement outlining a tokenized securities taxonomy. The commission later interpreted which crypto assets qualify as securities and when assets may cease being subject to investment contracts.
In April, SEC staff addressed broker-dealer registration implications for certain interfaces used to prepare tokenized securities transactions. In August, the commission proposed Regulation Crypto Assets, covering certain investment contracts involving crypto assets.
More 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. He added that onchain markets should not be pushed offshore or forced into unsuitable regulatory models.
He also 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.
