The U.S. Securities and Exchange Commission proposed new rules on October 1, 2026 that would let registered investment advisers hold client crypto assets themselves when no permitted custodian is available, Bitcoinmagazine reported. The framework would also allow qualifying state trust companies to serve as custodians for client and regulated fund crypto assets, subject to conditions.
SEC Chairman Paul S. Atkins framed the proposal as a replacement for rules written for traditional assets. “Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure,” Atkins said in a statement reported by Bitcoinmagazine. He added that the proposal would replace “the grey of uncertainty created by custody rules crafted for a bygone era.”
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Key facts
- The proposed rules and amendments fall under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, Coinpedia reported.
- Advisers could self-custody crypto under limited circumstances if they determine on a quarterly basis that no qualified third-party custodian is available, and if they meet cybersecurity and asset segregation safeguards.
- The SEC proposed allowing regulated broker-dealers to act as legal crypto custodians, dropping the requirement that they belong to a national securities exchange, subject to customer protection rules and asset segregation.
- Blockchain-based records could count toward compliance under conditions, per Bitcoinmagazine.
- The proposal has entered a 60-day public comment period after Federal Register publication, and voting is not expected until the first half of 2027 at the earliest, according to Coinpedia.
What the proposal covers
The framework addresses how regulated firms hold crypto rather than whether particular tokens are securities, Blockonomi reported. It would cover registered investment advisers, registered investment companies and business development companies, and would also address financial statement audits for registered advisers and broker-dealer custody services used by regulated funds.
Coinpedia reported a third element: an exemption for authorized discretionary trading from strict custody requirements, provided client accounts remain protected. Blockonomi noted that state trust custody has drawn internal disagreement, with Commissioner Caroline Crenshaw previously arguing that state oversight can vary and may offer fewer safeguards than federal banking supervision.
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The proposal follows a longer arc. Coinpedia reported it replaces the 2023 “Safeguarding Rule” proposal, which the agency withdrew in 2025 after criticism of its restrictive nature. Blockonomi reported the SEC had already moved toward the state trust model through 2025 staff guidance that offered conditional no-action relief, and had sent its crypto custody framework for White House review before the formal proposal. Earlier in September 2026, Atkins previewed the adviser self-custody approach because suitable third-party custodians remained unavailable for some digital assets.
Why it matters
Advisers and funds that want crypto exposure have faced a custody gap: traditional qualified custodians often lack the technical and regulatory footing to hold digital assets, while firms that understand the assets lacked a clear compliant path. The proposal gives state-chartered trust companies a formal role alongside banks, broadening the pool of eligible custodians. It also arrives as the SEC works on parallel initiatives covering crypto offerings, tokenized securities and market infrastructure, including the Regulation Crypto Assets proposal for tailored exemptions on certain investment contracts.
The timing matters politically. Lawmakers blocked the Clarity Act, the framework for sorting digital assets into securities, commodities or payment stablecoins, in a procedural vote in September 2026, as Bitcoinmagazine reported. Regulators had said before that vote they would keep regulating the crypto industry regardless of whether it passed, and Atkins said he would still work to make the U.S. the “crypto capital of the world.”
What to watch
The 60-day public comment window opens once the proposal appears in the Federal Register. After the agency reviews feedback and drafts revisions, a vote on this proposal and on Regulation Crypto Assets is not expected until the first half of 2027 at the earliest, Coinpedia reported.
Sources: Bitcoin Magazine, Coinpedia, Blockonomi
