SEC Proposes New Rules for Crypto Custody by Investment Advisers
- The SEC’s proposal allows investment advisers to self-custody clients’ crypto assets if no eligible custodian is available.
- Investment advisers must reassess the availability of custodians quarterly and transfer assets if a custodian becomes available.
- State trust companies can serve as crypto custodians under specific conditions, including safeguarding client assets.
- Advisers must implement safeguards for private keys and require approval from at least two authorized individuals for asset transfers.
- The proposal aims to address barriers limiting investment advisers from offering digital asset investments due to a lack of qualified custodians.
This regulatory change reflects the growing demand for crypto investments, as noted by SEC Chair Paul Atkins, who stated that the market has evolved into a multi-trillion-dollar asset class. The proposal seeks to modernize rules that have not kept pace with market developments.
The SEC’s initiative could significantly enhance the ability of advisers to manage clients’ crypto assets, addressing critical custody challenges in the evolving landscape of digital finance. (Source)
