On Thursday, the U.S. Securities and Exchange Commission put forward a fresh regulatory structure regarding digital asset safekeeping for regulated funds and investment advisers. This framework seeks to establish a lawful route for managing virtual currencies under guidelines that were largely written before the internet existed.
“Ever since Bitcoin emerged in 2008, the virtual asset sector has expanded from a niche curiosity into a multi-trillion-dollar asset category that investors actively wish to access,” remarked SEC Chairman Paul Atkins in an official announcement. “Regrettably, our policies and regulations have failed to keep pace.”
The initiative addresses a major void for institutional investors, where qualified safekeeping architecture for specific virtual assets might not yet be accessible. Furthermore, it would permit digital assets to undergo self-custody under particular conditions and enable state trust companies to act as custodians for the virtual holdings of clients and regulated funds. This carries significant weight for asset managers, hedge funds, and other participants seeking to hold bitcoin along with other virtual coins directly rather than utilizing an ETF or a different intermediary.
The draft rules would also grant advisers the ability to manage client and regulated fund crypto assets directly under restricted scenarios, such as when an adviser concludes that no authorized custodian is accessible. SEC Commissioner Hester Peirce clarified that this phrasing denotes investment managers functioning as custodians for client holdings, rather than everyday investors retaining personal control over their coins.
“True self-custody is not the right fit for everyone, but a large number of digital asset owners value being able to hold their own funds,” Peirce expressed in a public statement. “Regulators ought to vigorously defend investors’ right to self-custody instead of trying to compel investors into handing their assets over to someone else. But I digress.”
The open period for public feedback will stay active for a duration of 60 days.
“Additional regulatory plans are on the way, and I look forward to continuing to assist President Trump in cementing the United States as the global capital for cryptocurrency,” Atkins stated.
This declaration arrives as both the SEC and the Commodity Futures Trading Commission have ramped up efforts to formulate crypto regulations following the failure of the Clarity Act to pass in the Senate. In the days following that event, the SEC unveiled its long-awaited innovation exemption while the CFTC submitted crypto asset rulemaking to the White House.
“Moving swiftly & aggressively,” observed NovaDius President Nate Geraci on Thursday via a message on X. “Certain politicians are going to regret not passing the Clarity Act.”
Originally published at https://www.theblock.co/news/regulation/2026-10-01-sec-proposes-crypto-custody-rule-investment-advisers-funds-417498.
