The SEC has proposed a new regulatory framework for crypto custody that grants state-chartered trust companies a permanent role in the market. The rules also allow investment advisers to perform self-custody for assets not supported by qualified custodians, provided they meet strict security and reporting requirements.
This proposal formalizes practices that have operated under staff no-action relief since September 2025. By allowing self-custody as a fallback, the SEC aims to shift competition from regulatory charter status toward commercial capabilities, such as the breadth of supported assets and service integration.
The SEC estimates that self-custody compliance will cost advisers an average of $433 833 annually, with $376 000 allocated to internal-control reporting. These costs may limit the option to larger firms, potentially benefiting infrastructure providers like Fordefi and Fireblocks.
Traditional banks, such as BNY and State Street, which held over $234 trillion in customer assets globally in 2024, now face increased pressure to compete on service breadth rather than relying solely on their federal banking charters. Crypto-native firms like Coinbase, Gemini, and Fireblocks may gain clearer access to institutional clients.
The proposal is subject to a 60-day comment period following publication in the Federal Register. If adopted, the ability of a custodian to quickly support new tokens will become a key factor in institutional client acquisition, as regulated investors require qualified custody to hold assets.
