The SEC Proposed Crypto Custody Rules for Advisers and Funds. It Is Not Final.

On October 1, 2026, the U.S. Securities and Exchange Commission proposed rules for how investment advisers and certain funds can hold crypto assets for their clients. It is a proposal, not a final rule, and it applies to professional managers rather than to individuals holding their own crypto. Here is what the SEC published and what readers should and should not take from it.

Who the proposal covers

The proposal, numbered IA-7023 and IC-36353 under File No. S7-2026-35, would amend rules under the Investment Advisers Act and the Investment Company Act. It covers registered investment advisers, registered investment companies, and business development companies. In plain terms, these are the firms and funds that manage other people's money under SEC oversight.

It does not change how you store crypto in your own wallet, and it is not a ruling on any exchange or token.

What it would allow

The SEC's fact sheet describes two main paths for holding client crypto.

1. Adviser self-custody, with conditions

An adviser could hold client crypto itself if it meets several requirements. The examples listed by the SEC include:

Determining, at the start and then every quarter, that no permitted custodian is available.
Having the expertise and systems to safeguard assets, including private-key management and approval of transactions by at least two people.
Keeping each client's assets at addresses that hold only that client's crypto.
Reviewing cybersecurity at least once a year.
Obtaining an independent accountant's report on internal controls within six months, and every year after that.
Sending clients statements at least quarterly.
Signing a written agreement that the assets are treated as a "financial asset."
For regulated funds, oversight by the fund's board.

2. State trust companies as custodians

The proposal would let advisers and funds use state trust companies to hold crypto. The adviser would need a reasonable basis to believe the company is authorized by its state to provide crypto custody. It would also need to confirm written safeguarding policies, review the company's audited financial statements and internal-control report, and confirm that client assets are kept apart from the company's own assets.

Other changes in the proposal

The SEC also proposes updates to older custody and recordkeeping rules, including allowing records kept on a blockchain and amending Form ADV and Form N-CEN, which are disclosure forms that advisers and funds file.

What the SEC chairman said

Chairman Paul Atkins issued a statement on the proposal. He described it as giving "a compliant pathway where none existed before," and said that custodians may lag new assets' deployment by months. That is the chairman's view of the proposal, not a finding or a final decision by the Commission. The SEC has also said more crypto-related proposals are coming.

What it means, and what it does not

It is not in effect. The SEC says the comment period lasts 60 days after publication in the Federal Register. No Federal Register publication date was found, so a calendar deadline cannot be confirmed yet.
The text can change. Public comments and Commission votes may alter the final rule, or it may not be adopted.
It affects managed money. If you invest through an adviser or a registered fund that holds crypto, the proposal could change how that holding is safeguarded. If you manage your own wallet, nothing changes for you.
It does not endorse any asset. The proposal sets conditions for holding crypto. It does not say which assets are suitable or safe.

What to watch next

The Federal Register notice, which sets the comment deadline.
Comment letters from custodians, asset managers, and investor advocates.
The additional proposals the SEC says it plans to release.
Any changes between this proposal and a final rule.

For readers who work with an adviser, a practical question to ask is how your adviser currently holds any crypto in your account and who the custodian is. The answer will matter more once final rules exist.

Sources

Disclosure: This article summarizes a proposed rule that may change before any final version is adopted. The featured image is a generated illustration. This article is not financial, legal, or investment advice. AI-assisted research and writing. Cited sources, not AI alone, support the claims.