SEC proposes crypto custody rules allowing self-custody in certain circumstances

Securities and Exchange Commission Chair Paul Atkins highlighted a new proposal on Thursday to create a regulatory framework for the custody of cryptocurrencies. The proposal would allow cryptocurrencies to be held in self-custody under certain circumstances. It would permit state trust companies to act as custodians for client and regulated fund cryptocurrency assets. The proposed changes also aim to remove barriers that can limit advisers' ability to offer cryptocurrency-related investment advice. Atkins said the cryptocurrency market has grown from a niche curiosity into a multi-trillion-dollar asset class, but regulations have not kept pace. Atkins said the proposal would give investment advisers and funds a compliant pathway for cryptocurrency custody where none existed before. Atkins said the new rules would replace uncertainty created by rules from an earlier era. SEC Commissioner Hester Peirce earlier called cryptocurrency self-custody a fundamental American right. Peirce said people should be free to hold assets themselves or use intermediaries. Last month, Atkins said the SEC would act decisively to provide regulatory clarity for cryptocurrencies regardless of what happens with the CLARITY Act. The SEC has already proposed a regulation that would allow cryptocurrency projects to raise money without immediate registration requirements.