On October 1, 2026, the U.S. Securities and Exchange Commission proposed Adviser and Regulated Fund Custody Rules; Crypto Custody Rules — Release Nos. IA-7023 and IC-36353, File No. S7-2026-35 — to address how registered investment advisers and regulated funds may custody crypto assets that are funds or securities (or, for funds, securities or similar investments).
Chair Paul S. Atkins said the proposal aims to “provide a clear regulatory framework for the custody of crypto assets,” closing a gap where advisers and funds have been “guessing how to effect lawful custody” under rules written for traditional assets. The release is a proposal, not a final rule: comments are due 60 days after Federal Register publication.
Two rails changes sit at the center. First, under limited conditions, an adviser could self-custody client crypto — including for regulated-fund accounts under a parallel fund rule — when it determines in writing, initially and quarterly, that no permitted custodian is available for that asset. Guardrails described in commissioner statements and the proposing release include safeguarding expertise and systems, cybersecurity controls, annual reviews, internal-control reports, and client account-statement or equivalent disclosure requirements. Commissioner Hester M. Peirce noted the proposal’s “self-custody” label means adviser custody of client assets, not retail wallet self-custody.
Second, the proposal would allow eligible state-chartered trust companies to serve as permitted crypto custodians if the adviser or fund has a reasonable basis, after due inquiry, that the trust company is authorized by its state banking authority to provide crypto custody and maintains written policies reasonably designed to safeguard crypto and related cash — plus review of audited financials and internal-control reports, and segregation of client assets from the trust company’s proprietary assets.
The package also modernizes long-standing Advisers Act and Investment Company Act custody provisions and would redesignate the Advisers Act custody rule as proposed rule 223-1, with related Form ADV and Form N-CEN disclosure updates. Atkins framed the custody proposal as one piece of a broader Commission crypto stack that has included staff tokenization guidance, a tokenized-securities taxonomy, Regulation Crypto Assets offering proposals, and an Innovation Exemption for certain tokenized NMS-stock trading.
What it is not: a statute from Congress, and not an effective compliance path until the Commission adopts final rules after comment. Until then, the clean fact is that the Commission has put a public custody blueprint on the table — with self-custody and state-trust options as the headline institutional rails.