The US Securities and Exchange Commission has introduced a proposal to simplify custody rules for investment advisers managing digital assets. The initiative aims to address the scarcity of qualified crypto custodians, which has previously prevented some firms from offering token investments to their clients.
Under the new framework, advisers may hold client assets directly if no eligible custodian is available, subject to quarterly reassessments. This self-custody model requires strict security protocols, including the separation of client holdings, cybersecurity measures, and a dual-authorization process for all asset transfers.
The proposal also permits state trust companies to act as custodians, provided they meet specific requirements regarding asset safeguarding, internal controls, and audited financial statements. Regulated funds may also utilize self-custody arrangements under the oversight of their respective boards.
SEC Commissioner Hester Peirce noted that the move addresses long-standing regulatory uncertainty in the sector. The agency has opened a 60-day public comment period following the publication of the proposal in the Federal Register to finalize the new regulatory standards.
