Overview
- The SEC published a formal proposed custody rule (File No. S7-2026-35) on Oct. 1, 2026 that targets registered investment advisers and regulated funds and is open for a 60-day public comment period after Federal Register publication.
- The proposal would let advisers hold client crypto in self-custody only in limited cases such as when no qualified custodian will support an asset and would require documented controls, dual transfer authorization, and quarterly rechecks for alternatives.
- State-chartered trust companies could qualify as permitted custodians if they meet specified conditions including state authorization, audited financials, segregation of client assets, and ongoing regulatory reviews.
- The rule would update recordkeeping and audit standards and says blockchain-stored records can count for compliance under conditions, and the proposal was reviewed by the Office of Management and Budget before release.
- The custody plan is part of a larger SEC push to build a crypto rulebook under Chair Paul Atkins as Commissioner Hester Peirce prepares to leave, and if finalized it could widen custody options and make direct crypto strategies more practical for advisers and funds.