The U.S. Securities and Exchange Commission proposed a new crypto custody framework on October 1, including conditional direct custody by investment advisers and the use of state trust companies. The changes remain a proposal, with a public comment period before any final rulemaking.
The SEC announcement covers registered investment advisers and regulated funds, including registered investment companies and business development companies. It also proposes updates to audit and custodial-service requirements. The agency says comments will remain open for 60 days after the proposing release appears in the Federal Register, not simply 60 days from the announcement.
The proposed direct-custody option has an important limit. In her accompanying statement, Commissioner Hester Peirce explains that an adviser would first determine that no permitted custodian is available for the asset, then revisit that determination quarterly. Other specified conditions would also apply.
Peirce also clarifies the terminology: here, self-custody means an adviser acting as custodian for client assets. It does not mean that each client controls a personal wallet without an intermediary. That distinction changes who holds the keys and who is responsible for safeguarding them.
For state trust companies, the proposal would require due inquiry into state authorization and written safeguarding policies before engagement, with reassessment annually. The Block's reporting describes both options as part of the proposed framework.
For asset managers, the practical issue is whether suitable custody arrangements exist for the assets they want to offer. Expanding the permitted options could address that constraint, but the proposed checks would still make selection and oversight an operational responsibility.
The announcement does not approve a particular custodian, remove security risks or establish that every token falls within the same legal category. Institutions considering the framework will need the detailed proposing release and any eventual final text. The confirmed development is a new proposal for comment, rather than immediate permission to change custody arrangements.