On October 1, 2026, the SEC proposed rule changes addressing how investment advisers and regulated funds can custody crypto assets under the federal securities laws. The proposal, announced in SEC Press Release 2026-100 and accompanied by a fact sheet and proposing release under IA-7023, would modernize the custody framework under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. It is a proposal only: nothing changes for any firm until a final rule is adopted and takes effect.
What the SEC says is in the proposal
Based on the SEC's announcement, the proposal would:
- permit crypto assets to be held in self-custody under specified conditions;
- make state trust companies eligible to serve as custodians for client and fund crypto holdings;
- update the financial-statement audit standards that apply to registered advisers; and
- address broker-dealer custodial services for regulated funds (investment companies and business development companies).
SEC Chairman Paul Atkins described the proposal as providing a clear regulatory framework for crypto custody where uncertainty existed before. The comment period runs 60 days from publication in the Federal Register.
Why custody is the question that matters
For advisers, custody is the gating issue for almost any crypto strategy. Who holds the asset, how it is safeguarded, and how that is verified determine both what a firm can offer and what it must disclose and audit. Uncertainty over how existing custody requirements apply to crypto assets has been one of the main reasons advisers have been cautious about the space. A defined framework, including a path for self-custody and for state trust companies, is the kind of change that could widen who is willing to offer crypto exposure.
How it fits with the rest of the SEC's crypto agenda
This is the SEC's second major crypto proposal in recent weeks. In August it formally proposed Regulation Crypto Assets, a purpose-built offering framework we covered in our earlier breakdown. Where that proposal addresses how crypto assets are issued and sold, this one addresses how advisers and funds hold them for clients.
What to do now
If you advise clients who hold crypto, or you've considered offering crypto exposure, read the proposing release before the comment window closes and decide whether the conditions for self-custody or custody through a state trust company would work operationally for your firm. If you do not touch crypto, the practical step is simply to note the proposal in your regulatory-change log. Because this is a proposal, final terms may differ from what was announced.
How Compliers Can Help
Tracking proposals like this one and translating them into policy and disclosure changes is part of the ongoing monitoring we do for clients. See our Consulting & Staffing page for how we support firms through shifting rules.