The U.S. Securities and Exchange Commission proposed a crypto-asset custody framework on October 1 for registered investment advisers and regulated funds. The proposal would permit self-custody under certain circumstances and allow state trust companies to serve as custodians for client and fund crypto assets.

The covered funds include registered investment companies and business development companies. The package proposes changes under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, addressing how existing custody requirements apply to digital assets.

Conditional custody options

The SEC says the framework would remove barriers to crypto-related investment advice and enable a wider range of fund investment strategies. Those are the agency's stated objectives, not outcomes already delivered by the proposal.

CoinDesk reports that the contemplated self-custody route concerns an adviser holding clients' assets itself, rather than an individual managing a personal wallet. The SEC's announcement describes that permission as conditional; it is not a blanket exemption from custody safeguards.

The package also proposes updates involving financial statement audits for registered investment advisers and broker-dealer custodial services for regulated funds. For custody providers and investment managers, the concrete development is a published framework to assess, rather than immediate permission to change operating practices.

Proposal, not final rule

Public comments will remain open for 60 days after the proposing release appears in the Federal Register. That clock is tied to Federal Register publication, not simply the October 1 announcement. The proposal has not become a final rule, and its provisions may change before adoption.