SEC Crypto Custody Proposal: What It Means for Advisers
The SEC proposed crypto custody rules on Oct 1 letting advisers and funds use state trust companies and self-custody. Public comments run for 60 days.
Investment advisers and funds have long faced an awkward question about crypto: where are they actually allowed to keep it? On October 1, 2026, the US Securities and Exchange Commission proposed an answer. The SEC's new crypto custody proposal sets out how registered investment advisers, registered funds and business development companies can hold crypto assets for clients under federal securities law.
- Who it covers: registered investment advisers, registered investment companies and business development companies.
- Custodians: state trust companies could serve as custodians for client and fund crypto assets.
- Self-custody: permitted under specified circumstances.
- Next step: a 60-day public comment period after publication in the Federal Register.
What Does the SEC Crypto Custody Proposal Do?
The proposal amends rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. According to the SEC's announcement, it would allow crypto assets to be held in self-custody in certain circumstances, let state trust companies act as custodians, update requirements for broker-dealers providing custody services to regulated funds, and modernize financial statement audit requirements for advisers.
SEC Chairman Paul Atkins said the proposal would give investment advisers and funds "a compliant pathway where none existed before." The SEC noted that crypto has grown into a multi-trillion-dollar asset class while custody rules had not kept pace.
Is This a Final Rule?
No, and that distinction matters. This is a proposal. The public, including advisers, custodians and industry groups, gets 60 days after Federal Register publication to comment, and the SEC can revise the rules before adopting them. CoinDesk and Decrypt both reported the release on October 1, framing it as part of the agency's broader work on digital assets.
Why State Trust Companies Matter
Today, the major options for institutional crypto custody are a handful of banks and specialized firms. Clearly allowing state-chartered trust companies to serve as custodians would widen the field. Several crypto custodians already operate under state trust charters, so the change could give advisers more choices and more competition on fees and service.
It also fits a pattern of traditional finance building custody infrastructure, from Morgan Stanley's crypto trust bank plans to bank-run custody desks.
What Does It Mean for Everyday Investors?
Most people reach crypto through an adviser, a fund or an ETF rather than holding it directly. Clear custody rules make it easier for those professionals to offer crypto exposure with defined safeguards around who holds the assets and how they are audited. Nothing changes overnight, but the proposal maps a route for advisers who have been waiting on the sidelines.
As always, crypto remains volatile, and none of this is investment advice. Track the comment period and final rule in our crypto coverage.
Sources: U.S. Securities and Exchange Commission — October 1, 2026; CoinDesk — October 1, 2026; Decrypt — October 1, 2026.
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