The SEC proposed a new rule letting registered investment advisers hold crypto assets for clients themselves when no qualified custodian is available, alongside an explicit route for custody through state trust companies. The proposal arrives a day before Commissioner Hester Peirce, head of the agency's Crypto Task Force, leaves the SEC, and it now faces a 60-day public comment period.
The U.S. Securities and Exchange Commission proposed a new custody rule for crypto assets on Thursday, opening a self-custody path for investment advisers to hold clients' digital assets themselves when no qualified custodian exists for a given asset. Investment advisers are generally required to keep client funds with qualified custodians such as banks or registered broker-dealers.
Self-custody becomes a fallback option
Under the proposal, known as Release IA-7023, an adviser would first have to document a reasonable basis, after due inquiry, for believing no qualified custodian will hold the particular asset, then reassess that determination at least quarterly. Custodian fees alone would not justify the decision.
Self-custody would also require documented safeguarding expertise, private-key controls, and joint transaction authorization by at least two people, with each client's crypto held in separate onchain addresses. Advisers choosing self-custody would need an independent accountant's internal-control report within six months of starting self-custody and annually after that, plus quarterly statements to clients. The release also states that native bitcoin, ether and SOL generally fall outside the rule's scope for clients other than regulated funds, which face a broader standard covering securities and similar investments.
State trust companies get an explicit route
The proposal also permits the use of state-chartered trusts as custodians. That route builds on a September 2025 staff no-action letter that had conditionally let advisers and funds treat those entities as banks. Advisers using this route would need initial and annual due diligence on a trust company's state authorization and safeguarding policies, with client crypto kept segregated from the trust company's own assets.
Chairman Paul Atkins said the current rules reflect what he called "the grey of uncertainty created by custody rules crafted for a bygone era," according to a statement posted by the SEC.
Proposal arrives as Peirce exits
Thursday's proposal lands the day before Commissioner Hester Peirce exits the agency after leading the SEC's Crypto Task Force since its creation; she leaves Friday and will become a professor in Virginia. Her departure leaves the agency with only two commissioners, a shortfall the SEC addressed this week by lowering the quorum requirement from three commissioners to two.
A 60-day public comment period opens once the proposal is published in the Federal Register, and the rule is not yet in force.
Sources: U.S. Securities and Exchange Commission, The Defiant
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