SEC Unveils Proposed Rule to Modernize Crypto Asset Custody Standards

The U.S. Securities and Exchange Commission said this week it has proposed a new rule designed to close regulatory gaps around how investment advisers and funds custody crypto assets, according to a statement from SEC Chairman Paul Atkins. Atkins said the proposal would establish a clearer custody framework and compliance route for crypto assets as client demand grows. Current custody requirements under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 were written before the internet era and largely tailored to traditional assets, with a heavy reliance on approved custodians. In practice, custody support for newly listed crypto assets has often trailed listings by months. The SEC said the proposed update aims to address that lag while modernizing decades-old custody rules for advisers and regulated funds to better reflect current market practices and industry feedback. The agency described the initiative as part of a broader crypto asset regulatory framework. The statement also outlined related efforts, including an end to "enforcement as regulation," a no-action letter on The Depository Trust Company's security tokenization pilot by December 2025, and classification guidance for tokenized securities in January 2026. The SEC indicated additional follow-on work would cover the securities status of crypto assets, broker-dealer registration, "Regulation Crypto Assets," and potential exemptions to support tokenized NMS stock trading. Atkins said further proposals are planned.