SEC Chairman Paul Atkins acknowledged that current federal securities regulations have failed to keep pace with the growth of Bitcoin since its 2008 inception. The agency has introduced a new proposal to modernize custody rules for digital assets, aiming to replace outdated standards with a framework tailored to the current multi-trillion-dollar market.
The proposal amends the Investment Advisers Act and the Investment Company Act to provide a compliant pathway for registered investment advisers and regulated funds. Key provisions include allowing clients to self-custody crypto assets under specific conditions and permitting state-chartered trust companies to serve as custodians, expanding the role beyond traditional banks and broker-dealers.
This regulatory shift follows the stalling of the CLARITY Act in the Senate on September 15. The SEC is now pursuing rulemaking to address market structure concerns and reduce legal ambiguity for institutional investors. The public comment period for the proposal will remain open for 60 days following its publication in the Federal Register.
