SEC proposes framework allowing investment advisers, funds to self-custody crypto - The Block

The U.S. Securities and Exchange Commission has proposed a framework that would permit investment advisers and registered funds to custody crypto assets themselves, rather than relying exclusively on qualified third-party custodians. The proposal, reported by The Block, signals a potential shift in how regulated entities may hold digital assets under existing custody rules.

For advisers and funds, the change could matter on two fronts. First, it may broaden the set of permissible custody arrangements, giving firms more flexibility in how they structure crypto exposure for clients. Second, it raises familiar supervisory questions: self-custody places the burden of safekeeping, key management, and operational controls directly on the firm, areas where regulators have historically sought robust safeguards.

The proposal is not final, so its practical effect depends on the comment process and any revisions before adoption. What to watch: how the SEC defines eligibility and control requirements, whether additional investor-protection conditions are attached, and how the framework interacts with existing custody rules for traditional assets.