The U.S. Securities and Exchange Commission is reviving efforts to establish clear rules governing how investment advisers safeguard clients' cryptocurrency holdings, resurrecting a regulatory push that stalled under the previous administration.
A Second Attempt at Custody Rules
The SEC's renewed interest revisits territory it first explored in 2023, when the agency proposed tightly restricting where registered investment advisers could store their clients' digital assets. That earlier initiative faced significant industry pushback and ultimately failed to move forward before leadership at the commission changed hands.
The core issue centers on custody — the question of who can legally hold crypto assets on behalf of professional money managers, and under what conditions. For advisers operating in the digital asset space, the lack of definitive guidance has created persistent uncertainty about compliance obligations.
The rules governing who can safeguard investor crypto have remained one of the industry's most consequential open questions.
Details Remain Under Wraps
What distinguishes the current effort from its predecessor is the degree of secrecy surrounding it. The new approach has yet to be publicly detailed, leaving market participants to speculate about how the revised framework might differ from the 2023 version that drew criticism.
Industry observers will be watching closely to see whether the reworked proposal offers a more workable path for advisers seeking to expand into digital assets, or whether it revisits the narrower restrictions that generated opposition the first time around.
Key considerations likely to shape the debate include:
- Which entities qualify as acceptable custodians for client crypto
- How custody standards align with the unique nature of blockchain-based assets
- Whether the rules ease or tighten conditions for registered advisers
The outcome could carry significant weight for the growing number of investment advisers looking to offer crypto exposure to their clients, and for the custodians hoping to serve them.