U.S. SEC proposes overhaul of crypto custody rules... to lower regulatory barriers for investment advisers and funds

[Financial News]  The U.S. Securities and Exchange Commission (SEC) has proposed new rules that would make it easier for investment advisers and regulated funds to custody crypto assets on behalf of clients. After the comprehensive CLARITY Act addressing the structure of the crypto market stalled in the U.S. Senate last September, U.S. regulators appear to be accelerating efforts to overhaul crypto regulations by using their existing authority.
According to a CNBC report on the 1st (local time), the amendment announced by the SEC establishes a tailored regulatory framework governing how registered investment advisers (RIAs), investment companies and regulated funds such as business development companies (BDCs) custody and manage crypto assets.
The measure is intended to modernize decades-old rules governing asset custody and remove regulatory barriers that have limited investment advisers from offering crypto-related investment products amid continued regulatory uncertainty.
Under the proposal, advisers would be allowed to provide direct custody under certain conditions. State-chartered trust companies would also be able to serve as custodians for crypto assets held by clients and regulated funds. The SEC expects the overhaul to enable regulated funds to offer investors a broader range of crypto-linked investment strategies.
SEC Chair Paul Atkins said, "Since Bitcoin emerged, the crypto market has grown rapidly into a multitrillion-dollar market, but existing regulations have failed to keep pace." He added, "The proposal issued today will provide a clear regulatory framework for crypto custody, opening the way for investment advisers and funds to operate within the law."
The regulatory overhaul is part of an effort to redesign the digital-asset regulatory framework under Chair Atkins. The proposal will undergo a 60-day public comment period after it is published in the Federal Register.
Markets are closely watching the release of the proposal as the crypto market shows signs of recovery after experiencing volatility earlier this year. Bitcoin has rebounded more than 40% from its July low, buoyed by renewed appetite for risk assets, and appears to be emerging from a prolonged downturn that lasted from late 2025 through the first half of 2026.


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