SEC proposes new crypto custody rules as Atkins says regulations have lagged

The Securities and Exchange Commission has proposed changes to crypto asset custody rules under the Investment Advisers Act and the Investment Company Act. The changes would provide a custody framework for registered investment advisers and regulated funds, including mutual funds. SEC Chairman Paul Atkins said existing rules have not kept pace with the growth of crypto since Bitcoin launched in 2008. Atkins said the proposal would replace uncertainty under custody standards written before crypto existed. Under the proposal, advisers could let clients self-custody crypto assets under specific conditions. State-chartered trust companies could also qualify as custodians, expanding the role beyond banks and broker-dealers. The proposal follows the Senate's failure to advance the broader CLARITY Act market-structure bill on September 15. Existing custody rules have limited advisers' crypto-related guidance and created barriers for funds offering digital asset strategies. Atkins linked the proposal to a wider effort to make the United States the world's leading crypto hub. That effort includes ending regulation through enforcement actions and developing clearer tokenization frameworks. A 60-day public comment period will begin when the proposal appears in the Federal Register. Stakeholders are expected to address the self-custody provisions and the proposed custodian role for state-chartered trust companies. The proposed framework could reduce legal uncertainty for institutional investors and accelerate adoption of Bitcoin and other digital assets.