Crypto Custody Rules: SEC Proposes Path For Advisers And Funds

In press release 2026-100, the SEC said it proposed new crypto custody rules for registered investment advisers and regulated funds. Regulated funds means registered investment companies and business development companies. The agency calls its plan a tailored way to hold digital assets for clients. Comments stay open for 60 days after the proposal lands in the Federal Register.

Why Old Rules Don't Fit Crypto

Current custody rules were built for stocks and bonds. They lean on a permitted custodian, usually a bank. For many crypto assets, no such custodian exists yet. Chairman Paul Atkins said in a statement that custodial support can trail a new asset's launch by many months.

He said the proposal replaces "the grey of uncertainty created by custody rules crafted for a bygone era." The SEC's fact sheet adds a wrinkle. Some state trust companies offer crypto custody, but checking whether one counts as a bank under the old rules takes a fact-specific legal review. Even then, these custodians can't support every token.

What The Crypto Custody Rules Allow

The crypto custody rules would open two routes. Advisers and funds could self-custody, but only when no permitted custodian is available. Or they could use a state trust company that its own state banking authority has cleared to offer crypto custody.

Self-custody comes with a long checklist. The adviser must confirm before it starts, and every quarter after, that no permitted custodian can hold the asset. It needs documented expertise in safeguarding each asset. Its systems must cover private key management, and any transaction needs approval from at least two people.

Each client's crypto would sit in addresses holding only that client's assets. Within six months, an independent accountant must deliver an internal control report, then another every year. Clients would get account statements at least quarterly. For funds, the board reviews the adviser's written report each quarter and decides yearly that the assets get reasonable care.

SEC press release 2026-100, published October 1, 2026.

State trust companies face checks of their own. Before hiring one, and yearly after, the adviser or fund must review its latest audited financial statements and internal control report. It also needs a reasonable basis, after due inquiry, to believe the trust company runs written policies against theft and loss. Client crypto has to stay apart from the trust company's own assets.

Older Custody Rules Get A Refresh

Not all of it is about tokens. The SEC would end the rule that independent accountants under the custody rule be registered with the PCAOB. It would add exceptions for discretionary trading authority, standing letters of authorization and inadvertent custody. Forms ADV and N-CEN would collect more detail on crypto custody and tokenized fund shares.

Records kept on a crypto network could count toward recordkeeping duties, subject to conditions.

Part Of A Longer SEC Push

Atkins framed the move as one piece of a wider effort. He pointed to a December 2025 no-action letter on the DTC's tokenization pilot and a January 2026 staff statement on tokenized securities. August brought the Regulation Crypto Assets proposal, which we covered earlier, and a newer innovation exemption covers trading of tokenized NMS stock. "More regulatory proposals are on the horizon," he said.

None of this is final. The text can change once comments come in, and until then advisers still work under today's limits.