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ZEC $1,284 SEC Proposes Letting Advisers and Funds Hold Client Crypto When No Custodian Can
The SEC proposed rules that would let advisers and funds custody client crypto themselves when no approved custodian is available.
Key takeaways
- Comment window open. The 760-page release takes comments for 60 days after publication in the Federal Register.
- Quarterly checks required. An adviser must confirm that no permitted custodian is available every quarter.
- Two approvals needed. Key controls would require at least two people to approve each transaction.
What happened
The Securities and Exchange Commission proposed rules on Thursday that would let registered investment advisers and regulated funds hold client crypto themselves when no approved custodian can. State trust companies could also safeguard those assets. Current rules generally require advisers to keep client assets with a qualified custodian.
SEC Chairman Paul Atkins said the plan aims to close a gap that has left advisers and funds guessing how to hold an asset class their clients increasingly demand. He said custodial capabilities for new crypto assets may lag deployment by many months.
An adviser could hold a client's crypto only after concluding that no permitted custodian is available, and it would have to recheck that every quarter. Key controls would need at least two people to approve any transaction, and each client would get a separate address.
Before hiring a state trust company, and each year after, an adviser or fund would need grounds to believe the firm holds state authorization to custody crypto. Peirce wrote that allowing eligible state trust companies as permitted crypto custodians would increase competition and expand investor protection and investment options.
Why it matters
The proposed changes are not final, and the SEC is seeking public comments before making a final decision. The public comment period will remain open for 60 days.
The SEC said the proposal gives regulated funds more options for offering investment strategies linked to crypto assets.
The CLARITY Act's failure to advance has shifted attention toward what US regulators can do without waiting for Congress. Bitwise CIO Matt Hougan said the moves do not replace the CLARITY Act but show agencies can shape crypto rules through existing authority while legislation stalls.
The proposal comes two weeks after the SEC granted an exemption for onchain trading of tokenized stocks. Commissioner Mark Uyeda said an earlier custody proposal, from 2023, had built a "no-win" scenario for crypto, and the agency withdrew that plan in June 2025.
What the data shows
The release runs 760 pages, and comments stay open for 60 days after it is published in the Federal Register.
What is still unclear
- Peirce wrote that the proposal uses the term in a way that does not reflect true self-custody by investors, since it covers advisers acting as custodians for clients.
- The reports give no date for the end of the comment period, only that it runs 60 days after Federal Register publication.
Questions readers ask
Can advisers hold client crypto under the SEC proposal?
Yes, but only after concluding that no permitted custodian is available, and they would have to recheck that every quarter. State trust companies could also serve as custodians under the plan.
Is the SEC crypto custody proposal final?
No. The changes are not final, and the SEC is seeking public comments before making a final decision. The comment period stays open for 60 days.
