- The SEC has proposed a standalone framework governing crypto-asset custody by registered investment advisers and affiliated funds.
- Advisers and regulated funds could self-custody digital assets under certain conditions or use state-registered trust companies as custodians.
- The public will have 60 days to comment after the proposal is published in the Federal Register.
The U.S. Securities and Exchange Commission has proposed rules and amendments governing how registered investment advisers and affiliated funds may custody crypto assets. The initiative would establish a standalone regulatory framework under two federal laws, a change the SEC said would remove barriers limiting investment advisers’ ability to provide crypto-related services.
The SEC disclosed the proposal in an announcement. The framework would operate under the Investment Advisers Act of 1940 and the Investment Company Act of 1940.
Self-custody and trust companies
Under the proposal, investment advisers and regulated funds could self-custody crypto assets if they meet specified conditions. They could also engage state-registered trust companies to act as custodians.
The SEC also plans to update existing requirements covering audits of investment advisers’ financial statements, asset custody through broker-dealers, recordkeeping and disclosures.
SEC Chair Paul Atkins said current regulations had not kept pace with the development of the digital-asset market.
“The proposal will create a clear regulatory framework for the custody of crypto assets and provide investment advisers and funds with a legally compliant mechanism where one previously did not exist,” he said.
Public comment period
The proposal will be open for public comment for 60 days from the date it is published in the Federal Register. The SEC may review the feedback before making a final decision on the rules.
The regulator had previously approved limited onchain trading in tokenized stocks, according to an earlier report.
Source: Incrypted
