The U.S. Securities and Exchange Commission introduced its cryptocurrency custody regulation on Thursday, integrating an additional crucial component into the organization’s digital asset agenda.
This custody regulation establishes clear parameters regarding which entities may safeguard the digital assets belonging to clients of investment firms, while additionally providing a pathway for advisers to engage in self-custody of client holdings under specific, restricted conditions.
Thursday’s announcement represents the newest initiative by the SEC to roll out cryptocurrency regulations, following last month’s introduction of the Innovation Exemption and August’s release of Reg Crypto.
The U.S. Securities and Exchange Commission intends to bring clarity to how investment managers handle and protect consumer cryptocurrency holdings through a newly unveiled rule proposal on Thursday.
According to a published statement from SEC Chairman Paul Atkins, the proposal will establish a well-defined regulatory structure for digital asset safekeeping, offering investment managers and funds a compliant avenue that previously did not exist, thereby eliminating the ambiguity caused by legacy custody standards designed for a different era.
The updated framework from the SEC specifies which business categories are qualified to properly manage digital currencies, outlines recordkeeping and federal reporting obligations for investment managers and regulated funds, and introduces updated interpretations regarding industry standards and auditing mandates.
As detailed within the 760-page regulatory text, the SEC permits investment professionals to utilize self-custody when managing client assets. The commission employs the phrase “self-custody” to describe an operational method for asset management companies rather than the definition typically utilized across the cryptocurrency sector. Implementation first requires that an adviser is unable to locate an eligible custodian willing to accept the holdings—an event expected to remain uncommon after the framework takes effect—and mandates that the advisory firm possesses specialized competence in holding digital currencies. Furthermore, an SEC representative noted that this permission to retain client assets directly must undergo quarterly reviews to determine if a qualified custodian has become accessible.
The representative acknowledged that occurrences of self-custody, which originated from an industry appeal directed to the Crypto Task Force, will likely remain rare, though they might apply to newly issued tokens lacking immediate custodian support.
Atkins pointed out that legacy custody guidelines were formulated to safeguard the holdings of investment clients and supervised funds against loss, theft, abuse, and embezzlement, yet they exclusively address the safekeeping of legacy properties—a situation he described as untenable for the twenty-first century.
The newly suggested framework, which is currently open to a 60-day public feedback window, would also authorize state-chartered trusts to act as qualified custodians.
This latest step toward advancing a pro-cryptocurrency U.S. securities platform occurs on the eve of the departure of Commissioner Hester Peirce, who has directed the agency’s Crypto Task Force since its inception. Her exit on Friday precedes a move to academia as a professor in Virginia, leaving the commission with a total of two active members. Earlier this week, the SEC adjusted the minimum commissioner count required to establish a quorum, shifting the requirement from three members down to two. Should one of those two members face a conflict of interest regarding a specific vote, the remaining member retains the authority to constitute a valid quorum.
Through this progression on custody standards, the SEC has successfully addressed every primary objective outlined in Atkins’ original cryptocurrency agenda.
The commission recently unveiled its anticipated “Innovation Exemption” tailored for tokenized securities, establishing clear procedures for entities seeking to integrate traditional financial instruments onto a blockchain network. Additionally, the SEC introduced Regulation Crypto Asset, detailing methods for enterprises to raise capital utilizing digital tokens while remaining compliant with federal oversight.
Originally published at https://www.coindesk.com/policy/2026/10/01/u-s-sec-maps-out-crypto-custody-in-new-proposal-that-furthers-its-digital-assets-agenda.
