The SEC proposed the first compliant pathway for investment advisers and registered funds to custody Bitcoin — and opened self-custody as an option of last resort.
The Securities and Exchange Commission on October 1 formally proposed a custody framework for registered investment advisers and regulated funds, designating state-chartered trust companies as qualified custodians for crypto assets — a custodian category that does not exist under current rules — and permitting conditional self-custody when no qualified custodian is available. An adviser seeking to self-custody would be required to document a determination that no permitted custodian is accessible, then review that determination on a quarterly basis. Chair Paul Atkins stated that existing custody rules largely predate the internet and leave advisers without a compliant route for an asset class clients increasingly demand. The proposal covers all digital assets, including Bitcoin, held at SEC-registered entities; it does not address broker-dealer custody, which remains under separate rules. A 60-day public comment period begins upon Federal Register publication; the framework is not yet final.
If finalized, the rule would remove the principal regulatory barrier preventing registered investment advisers — who collectively oversee tens of trillions in client assets — from holding Bitcoin directly in custody rather than through ETF wrappers.
