SEC takes another shot at crypto custody rules for advisers
The SEC is reviving a 2023 attempt to restrict where investment advisers can hold client cryptocurrency, but details remain unclear.
The Securities and Exchange Commission is working on new rules about where investment advisers can store their clients' cryptocurrency holdings. The agency tried a similar approach in 2023 but the effort stalled. This time around, the specifics of what the SEC is proposing have not been made public yet.
Investment advisers are companies that manage money on behalf of clients. They charge fees based on the assets they oversee. When clients own crypto, advisers have to decide where to keep it safe. That's called custody, which just means physical or electronic safekeeping. The SEC wants to be the one who decides which custodians are acceptable places for an adviser to park client assets.
In the previous attempt, the SEC tried to narrow the list of who could act as a crypto custodian for investment advisers. The rule didn't pass. Now the agency is signaling it plans to try again. The new version is still being drafted, so the details of what would be restricted and how remain unknown.
For investment advisers and their clients, these rules matter because they determine safety and access. A custodian that meets SEC standards is supposed to have insurance, security practices, and regulatory oversight. Clients want confidence their holdings won't vanish. Advisers need approved options or they can't legally offer crypto investing services. If the SEC approves only a handful of custodians, advisers with fewer choices might face higher fees.
What remains unclear is exactly which custody arrangements the SEC plans to allow or forbid. The agency hasn't shared a draft proposal for public comment. It's also unknown whether the financial industry will back this version, or if it will hit the same obstacles as 2023. The timing for a formal rule announcement hasn't been disclosed.
First reported by CoinDesk: Read the CoinDesk story.