The U.S. Securities and Exchange Commission (SEC) has announced a proposal to make it easier for investment advisers and regulated funds to hold cryptocurrencies on behalf of clients, marking a significant regulatory development as broader crypto legislation remains stalled in Congress [1]. The proposed rules would establish a tailored framework for registered investment advisers, investment companies, and business development companies to custody crypto assets, modernizing decades-old requirements and removing barriers that have previously limited advisers' ability to offer crypto-related investments [1].
Under the new framework, crypto assets could be held in self-custody under 'certain circumstances,' and state trust companies would also be permitted to serve as custodians for client and fund crypto assets [1]. This change could expand the ability of regulated funds to offer investors crypto-related strategies, according to the SEC [1]. SEC Chairman Paul Atkins emphasized the need for updated regulations, stating, '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' [1].
The proposal comes as the SEC continues to use its existing authority to address specific market bottlenecks, following the stalling of the Clarity Act in the Senate in September 2026 [1]. Jeff Ko, chief analyst at ViaBTC, noted that the SEC is addressing issues such as issuance, tokenization, trading exemptions, and now custody, one by one [1]. Ko also suggested that the changes could increase competition among crypto custodians, potentially lowering costs and complexity for institutional investors, as custody has historically been concentrated among a small number of providers [1].
The regulatory push coincides with renewed momentum in crypto markets. Bitcoin has rebounded over 40% from its July low, reflecting improved risk appetite and revived demand for digital assets after a prolonged downturn from late 2025 into the first half of 2026 [1]. The SEC's proposal will be open for public comment for 60 days after publication in the Federal Register [1].
CONCLUSION
The SEC's proposed rules represent a major step toward clarifying and modernizing crypto custody regulations for investment advisers and funds. Market participants and analysts suggest the changes could foster greater competition and lower barriers to institutional crypto investment, coinciding with a notable recovery in digital asset prices. The proposal's public comment period will be closely watched as the SEC continues to shape the regulatory landscape for cryptocurrencies.