SEC issues crypto custody guidance for registered investment advisers

The Securities and Exchange Commission has released a fact sheet on crypto custody for registered investment advisers. It accompanies a proposed rule that could change who is allowed to hold client digital assets. What the SEC is proposing On October 1, 2026, the SEC proposed a new rule filed under Release No. S7-2026-35. Its stated goal is to modernize custody arrangements for crypto assets and crypto securities. The proposal targets two groups. The first is registered investment advisers (RIAs) that hold client crypto funds. The second is regulated investment companies that manage crypto securities. The existing rules come from two statutes, the Advisers Act and the Investment Company Act. Both were written long before anyone held a private key. The new proposal aims to update those frameworks for digital assets. The most significant change concerns who qualifies as a custodian. Under the proposal, qualified state-chartered trust companies could serve as permissible custodians. They would have to meet defined conditions to do so. The proposal is also not final. The SEC has opened it to public comment. The comment window runs for 60 days after the proposal appears in the Federal R...