SEC Proposes New Rules for Crypto Custody by Advisers and Funds
- The SEC proposed a framework on October 1 allowing advisers to hold investors’ crypto directly when a permitted custodian is unavailable.
- State trust companies could act as custodians, subject to initial and annual security policy checks.
- A 60-day comment period will follow the proposal’s publication in the Federal Register.
- Quarterly reassessments and annual security reviews are required for direct safekeeping eligibility.
- Investors would receive quarterly statements, with holdings occupying separate blockchain addresses.
The SEC aims to update its custody rules to accommodate the evolving crypto asset market, which has grown significantly since Bitcoin’s inception in 2008. This proposal reflects an effort to align regulatory frameworks with modern financial assets while ensuring investor protection through rigorous oversight and compliance measures.
The proposal underscores the need for updated regulations that match the rapid growth of the crypto market, emphasizing safeguards like quarterly reassessments and independent audits to protect investors’ assets effectively. (Source)
