SEC Proposes Framework for Crypto Asset Custody

ChainCatcher report: SEC Chairman Paul Atkins issued a statement announcing that the Commission has proposed a rule this week to address regulatory gaps in the custody of crypto assets by investment advisers and funds, providing a clear custody framework and compliance pathway for an asset class with growing client demand. Atkins noted that existing custody rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 were established before the advent of the internet and primarily focused on traditional assets, requiring the use of approved custodians. The ability to custody new crypto assets has often lagged months behind asset listings; this proposal aims to resolve this issue while updating decades-old custody rules for advisers and regulated funds to align with current industry practices and feedback. The statement indicated that the proposal is part of the SEC’s broader crypto asset regulatory framework. Related initiatives include ceasing enforcement-as-regulation, issuing a no-action letter on the Depository Trust Company’s security tokenization pilot by December 2025, publishing a classification guidance for tokenized securities in January 2026, and subsequent actions regarding the securities status of crypto assets, broker-dealer registration, Regulation Crypto Assets, and innovative exemptions for tokenized NMS stock trading. Atkins stated that additional regulatory proposals will follow.