SEC proposes custody framework that would let registered funds hold crypto assets

The Securities and Exchange Commission on 1 October proposed new rules and amendments setting out a tailored framework for the custody of crypto assets. The framework would apply to registered investment advisers and to regulated funds. The SEC defines regulated funds as registered investment companies and business development companies, a definition that covers ETFs registered under the Investment Company Act.

What would change

The SEC said the proposal would allow regulated funds to offer access to a wider range of crypto asset-related investment strategies. It would also remove barriers that, according to the agency, inhibit advisers from giving crypto-related advice. Among the specific measures, the proposal would permit crypto assets to be held in self-custody in certain circumstances, and would allow state trust companies to act as custodians for client and regulated fund crypto assets.

The amendments under the Investment Advisers Act and the Investment Company Act also update requirements on financial statement audits for advisers and on broker-dealer custodial services for regulated funds.

Chairman’s statement

“Our rules and regulations have not kept pace,” SEC Chairman Paul S. Atkins said. He said the proposal would give “investment advisers and funds a compliant pathway where none existed before”.

Next steps

The comment period runs for 60 days after the proposing release is published in the Federal Register.

Why it matters

Custody rules for 1940 Act funds help determine which crypto exposures can be held inside registered funds, including ETFs registered under that Act. The proposal is at the comment stage and is not yet in force.

Added to The Midpoint on 31 October 2026, with the ETFs section. This article is dated to the event it describes; it was not published at the time.

Sources

• SEC Proposal Would Address How Investment Advisers and Funds Can Custody Crypto Assets Under the Federal Securities Laws (Press Release 2026-100), US Securities and Exchange Commission, 1 Oct 2026