SEC proposes new crypto custody framework

The US Securities and Exchange Commission proposed a new framework for how investment advisers and funds custody crypto assets. The proposal is intended to clarify which entities qualify as custodians and how existing investor-protection rules apply to digital assets.

The framework would permit self-custody in limited circumstances, including cases where an appropriate permitted custodian is unavailable, subject to additional controls and disclosures. It also addresses the role of regulated trust companies and other institutions holding assets for clients.

The proposal creates a route towards clearer federal custody rules but is not yet binding. Its practical effect will depend on the final definition of eligible custodians and the conditions advisers must satisfy before holding assets themselves.