SEC Unveils Updated Crypto Custody Rules

The U.S. Securities and Exchange Commission has proposed modernizing how investment advisers and regulated funds safeguard client assets, with a strong emphasis on digital currencies.

In a Thursday statement, the Wall Street regulator said it would allow advisers and funds acting through their advisers to directly hold client crypto assets, but only when no authorized custodian is available.

Regulators are pressing ahead with rulemaking for digital assets even after lawmakers blocked the Clarity Act last month.

JUST IN: SEC Chairman Paul Atkins releases a statement to address the custody of crypto 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"

— Bitcoin Magazine (@BitcoinMagazine) October 1, 2026

The long-awaited legislation — a framework to classify digital assets as securities, commodities or payment stablecoins — failed to get the votes needed to advance.

"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. Unfortunately, our rules and regulations have not kept pace," SEC Chairman Paul S. Atkins said in a statement.

"To that end, today's proposal would provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before — and replacing the grey of uncertainty created by custody rules crafted for a bygone era."

The regulator said in its proposed rules that records kept on a blockchain could count toward compliance, subject to conditions.

It also said it would allow state trust companies to act as custodians for client and regulated fund crypto assets, subject to conditions.

Lawmakers blocked the Clarity Act in a procedural vote last month. Before that vote, regulators had said they would start regulating the crypto industry regardless of whether the landmark legislation passed.

The SEC, ahead of the vote, sent a proposal to the White House aiming to "clarify the framework for the custody of crypto assets" for investment advisers and companies.

Pro-crypto Atkins said he would continue working to make the U.S. the "crypto capital of the world" even if the landmark legislation does not pass.