SEC proposes rules to let advisers and funds hold crypto for clients

The US Securities and Exchange Commission has proposed rules that would make it easier for investment advisers and regulated funds to hold cryptocurrencies on behalf of clients, CNBC and CoinDesk report.

The proposal, announced on Thursday, sets out a tailored framework for how registered investment advisers, investment companies and business development companies hold custody of crypto assets. Under the plan, state trust companies could serve as custodians, and advisers could hold clients' crypto themselves in "certain circumstances".

SEC Chairman Paul Atkins said the 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". Atkins said existing custody rules covered "only traditional assets", which was "an untenable situation in the 21st century".

According to CoinDesk, the 760-page proposal would allow self-custody only when an adviser cannot find a qualified custodian willing to take the assets and has the necessary expertise, and that arrangement would have to be reviewed every quarter. An SEC official acknowledged such cases would likely be unusual, though they could apply to a newly launched token that custodians do not yet support.

The move is the latest step in the SEC's effort to build a crypto rulebook under its existing powers after the Clarity Act, a sweeping market structure bill, stalled in the Senate in September. It follows the agency's Innovation Exemption last month and its Reg Crypto release in August.

"What we're increasingly seeing is the SEC using the authority it already has to solve individual bottlenecks one by one," Jeff Ko, chief analyst at ViaBTC, told CNBC. He said the changes could increase competition among custodians and lower the cost of investing in digital assets.

The proposal will be open for public comment for 60 days after it is published in the Federal Register. It comes a day before Commissioner Hester Peirce, who led the SEC's Crypto Task Force, leaves the agency, which will then have just two commissioners.

Sources

• CNBC
• CoinDesk