SEC Proposes New Crypto Custody Framework
The U.S. Securities and Exchange Commission has proposed a new regulatory framework for crypto. The aforementioned framework would make it easier for registered investment advisers and regulated funds to get exposure to the novel asset class on behalf of clients, including, in some cases, through self-custody. The proposal would amend custody requirements under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. The SEC would permit advisers to self-custody certain crypto assets when an appropriate outside custodian is unavailable. State-chartered trust companies would also receive a pathway to be crypto custodians. SEC Chairman Paul Atkins has stated that existing custody rules were built around a financial system that looked very different from todays. Bitcoin did not exist when much of the framework was developed. Since then, crypto has become a multi-trillion-dollar asset class sought by investors. Atkins said the proposal is intended to replace the regulatory uncertainty surrounding crypto custody with a defined compliance framework for investment advisers and funds. In his words, the existing rules had been “crafted for a bygone era.” It is worth noting that these are only proposed rules. Their final form could change following public feedback. The proposal does not simply give investment advisers unrestricted permission to hold private








