What does the proposal do?

The SEC has proposed a new framework that reworks crypto custody rules to bring decades-old custody standards into line with the digital asset market. The draft aims to create a clearer, more compliant path for registered investment advisers, investment companies and business development companies to hold crypto assets on behalf of clients.

The rule is based on the view that current requirements create barriers that limit advisers from offering crypto-linked investments. SEC Chairman Paul Atkins argued that digital assets have grown into a market worth trillions of dollars, while the existing framework has failed to keep pace with that growth.

Which institutions and methods are covered?

If adopted, the proposal could allow self-custody under certain conditions. State trust companies could also act as crypto custodians for client assets and regulated funds.

  • Clearer custody rules for registered investment advisers
  • A dedicated custody framework for investment companies and business development companies
  • Broader room for regulated funds to offer investors crypto-linked strategies

According to the SEC, the changes could also allow regulated funds to offer crypto-linked investment strategies within a broader framework. That could give market participants more room to maneuver not only in custody services, but also in product design and investment options.

Timing and market impact

The proposal comes after the Clarity Act, one of the major legislative efforts to create a broad U.S. crypto regulatory framework, failed to advance in the Senate in September. With Congress unable to pass a comprehensive law, the SEC and other regulators are moving to expand the crypto rulebook within their current authority.

Once published in the Federal Register, the draft will be open to public comment for 60 days. The process marks another step in the broader effort under Paul Atkins to reshape the U.S. regulatory framework for digital assets.

In markets, the regulatory push comes as signs of recovery have emerged after a volatile start to the year. Bitcoin has risen more than 40% from its July low, as improving risk appetite has revived demand for digital assets following a prolonged slide stretching from late 2025 into the first half of 2026.