TL;DR
- The SEC proposed a new crypto custody rule that offers investment advisers and funds a much clearer regulatory framework.
- The 760-page proposal allows self-custody by advisers when no qualified custodian is available, subject to quarterly review.
- The initiative coincides with the departure of Commissioner Hester Peirce, leader of the Crypto Task Force, who will leave the agency on Friday to pursue a teaching career.
The SEC submitted a proposed rule aimed at establishing how investment firms must custody their clients’ crypto assets, filling a regulatory gap the industry had been carrying for years.
The initiative, driven under the leadership of Chairman Paul Atkins, seeks to replace regulatory frameworks designed for traditional assets that do not account for the particularities of digital assets.
TODAY 🚨: The Commission proposed new rules and amendments to provide a tailored framework for the custody of crypto assets for registered investment advisers and regulated funds, i.e. registered investment companies and business development companies. pic.twitter.com/MP16NmQ6og
— U.S. Securities and Exchange Commission (@SECGov) October 1, 2026
The New Custody Framework According to the SEC
The 760-page document details the types of entities authorized to custody crypto assets, the internal recordkeeping requirements and disclosure obligations to the federal regulator.
Among the most relevant points is the possibility of self-custody by investment advisers, though under strict conditions: it is only permitted when no qualified custodian is willing to accept the assets in question, a situation the regulator itself acknowledges as uncommon once the rule takes effect. In addition, the ability to self-custody must be reviewed quarterly to determine whether a qualified custodian has since become available.
An SEC official noted that this mechanism could apply, for example, to newly launched tokens that custodians do not yet support. The proposal also enables the use of state-chartered trust companies as valid custodians. The text was opened for public comment for a period of 60 days.
Atkins argued that the existing custody rules were designed to protect client assets from loss, theft, and misappropriation, but that they only contemplate traditional assets, making them unworkable in today’s financial landscape.
Peirce’s Farewell and the Complete Crypto Roadmap
The publication of this rule came one day before the formal departure of Commissioner Hester Peirce, who led the Crypto Task Force since its creation and will join as a professor in Virginia. Her departure leaves the agency with only two commissioners. In response, the SEC modified this week the quorum required to hold sessions, reducing it from three to two members, with the provision that a single commissioner may act if the other has a conflict of interest.
With this proposal, the agency checked off every central topic on the crypto agenda outlined by Atkins. In recent weeks, the SEC also published the so-called “Innovation Exemption” for the tokenization of securities and proposed the Regulation Crypto Asset, which establishes how companies can raise funds through digital assets without violating federal regulations.
