SEC moves to clear custody hurdle for advisers offering crypto
Custody requirements have kept some investment advisers from offering certain crypto to clients, a regulatory hurdle the SEC’s proposal could remove.
The US securities regulator has proposed easing rules governing how investment advisers and funds hold crypto, potentially clearing a regulatory hurdle that has held some businesses back from offering clients digital asset investments.
The proposal, published on Thursday, would let investment advisers hold clients’ crypto assets themselves when no eligible crypto custodian is available, with conditions. It would also allow state trust companies to serve as crypto custodians.
“The crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure. Unfortunately, our rules and regulations have not kept pace,” US Securities and Exchange Commission Chair Paul Atkins said in a statement.
The proposal targets a practical barrier to crypto investment: investment advisers can struggle to find a qualified custodian for a particular token, limiting the investments they can offer clients.
The Digital Chamber has previously raised concerns about the lack of qualified crypto custodians. In a May 2025 submission to the SEC, the Digital Chamber said some advisers had declined token allocations or asked portfolio companies to retain them until custody became available.
In a statement on Thursday, SEC Commissioner Hester Peirce likened the uncertainty to a regulatory “roller coaster,” saying advisers have been “gritting their teeth and holding on for dear life” while awaiting workable custody rules.
Under the SEC proposal, advisers seeking to hold clients’ crypto themselves would have to establish that no permitted custodian is available for each asset and reassess that determination quarterly. If a custodian becomes available, the assets would need to be transferred as soon as reasonably practicable.
Self-custody would also require safeguards around private keys, cybersecurity and separation of each client’s holdings. At least two authorized individuals would have to approve any transfer of a self-custodied crypto asset.