SEC Proposes New Custody Rules for Crypto Assets Held by Investment Advisers and Funds

The U.S. Securities and Exchange Commission (SEC) has unveiled a proposal aimed at establishing clear regulatory guidelines for how registered investment advisers and regulated funds can custody crypto assets. This proposal forms part of the SEC’s ongoing efforts to integrate digital asset management within established securities frameworks while addressing investor protection concerns.

Under the new rules and amendments, registered investment companies and business development companies, alongside registered advisers, would be provided with a tailored framework governing the safekeeping of cryptocurrencies. Key aspects include requirements intended to secure assets against misappropriation and to enhance transparency over custodian practices.

This regulatory initiative is expected to clarify compliance obligations and reduce ambiguity for firms handling crypto custody, potentially reducing operational risk and increasing market confidence. By aligning digital asset custody with existing federal securities laws, the SEC aims to provide both protection for investors and a structured compliance environment for market participants.

The proposal invites public feedback as the SEC evaluates appropriate measures to balance innovation with investor safety in the rapidly evolving crypto landscape. If adopted, these rules would mark a significant step towards harmonizing crypto asset management with traditional financial regulation.