SEC proposes crypto custody framework for RIAs under Advisers Act

The Securities and Exchange Commission proposed a tailored framework for how registered investment advisers (RIAs) and registered funds can custody crypto assets. The proposal, announced in press release 2026-100, amends the Investment Advisers Act of 1940 and the Investment Company Act of 1940. The 60-day comment window opens on publication in the Federal Register.

What changed

Under the current custody rule, an RIA holding client crypto has struggled to meet the "qualified custodian" standard — most state trust companies, exchanges and software custodians don't cleanly fit either the bank or the broker-dealer leg of the existing rule, and the staff's prior no-action posture has shifted multiple times since 2022.

The new proposal names three permitted custody arrangements for crypto assets:

• State-chartered trust companies meeting conditions the proposal spells out (segregation, auditing, capital, oversight).
• Broker-dealers, including special-purpose broker-dealers already registered for digital-asset custody under the 2020 statement.
• Self-custody by the adviser, allowed "under certain circumstances" — the specific guardrails for self-custody are the single most consequential piece of the release for crypto-native funds.

The proposal also updates financial-statement audit requirements for RIAs and clarifies the role of broker-dealers as custodians to regulated funds. Comment period: 60 days after Federal Register publication.

Who said what

SEC Chairman Paul S. Atkins framed the move as catching the rulebook up to a now-multi-trillion-dollar asset class: "Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class…"

The commissioner vote tally and any dissents were not included in the press release itself and are expected in the fact sheet accompanying the published rule.

Why it matters

A clear custody path for RIAs is the gating item for traditional-finance crypto allocation at scale. Separately-managed accounts, model portfolios, and 40 Act fund wrappers can't deploy without a custody rule that doesn't require a bank to touch tokens the bank can't accept.

• The state-trust-company lane legitimises counterparties like Anchorage, Fireblocks' custody arm, Fidelity Digital Assets, and the newer state-trust charters (Wyoming, South Dakota) RIAs have been using in uncertain legal footing.
• The self-custody carve-out is the carve-out crypto-native funds have asked for since 2021. The conditions will determine whether this is a real option or a theoretical one.
• The broker-dealer path formalises what the 2020 SAB 121-era statement set up, now surviving its February 2025 rescission.

What to watch

1. The exact self-custody conditions in the proposing release — key qualifiers: insurance, surprise examinations, segregation at the key-material layer, and whether multi-sig / MPC qualifies.
2. Which state trust-company regimes meet the conditions on day one. Wyoming SPDIs and New York limited-purpose trust companies are the main contenders.
3. Comment filings from the asset-manager side (BlackRock, Fidelity, VanEck) and the crypto-custody side (Anchorage, Coinbase Custody, BitGo) — they diverge sharply on broker-dealer vs. trust-company primacy.
4. The pairing with SEC's new Exam Handbook released the same day; crypto-custody examinations are a near-term enforcement surface regardless of how the custody rule lands.

Context

The proposal is a long way from the 2023 safeguarding-rule rewrite that would have folded crypto into a broad "qualified custodian" expansion. That version was withdrawn under the previous chair after industry pushback. This proposal splits crypto into its own regime rather than forcing it into an all-asset rule — a narrower approach that has a better chance of surviving the comment process intact.