SEC Proposes New Custody Rules for Crypto Assets Held by Advisers
The SEC has unveiled proposed rules creating a tailored framework for how registered investment advisers and funds must custody crypto assets.
The Securities and Exchange Commission has put forward new rules and amendments designed to establish a dedicated custody framework for cryptocurrency assets held by registered investment advisers and regulated funds, including registered investment companies and business development companies.
The proposal signals a significant regulatory step by the SEC to bring crypto asset custody practices in line with the standards that govern traditional securities holdings. Under existing federal securities law, custody requirements for advisers and funds were not specifically designed with digital assets in mind, creating ambiguity for firms managing client crypto portfolios.
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By introducing a tailored framework, the SEC aims to close regulatory gaps and provide clearer compliance pathways for market participants who manage or hold crypto on behalf of clients. The rules would apply to registered investment advisers operating under the Investment Advisers Act as well as regulated funds subject to federal oversight.
The initiative reflects the commission's broader effort to assert jurisdiction over digital asset markets and ensure investor protections extend to crypto holdings just as they do to conventional financial instruments. Industry participants will have an opportunity to comment on the proposed rules before any final version is adopted.
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