On 1 October 2026 the US Securities and Exchange Commission proposed “Adviser and Regulated Fund Custody Rules; Crypto Custody Rules” — Release IA-7023, the custody piece of the project Chair Paul Atkins had previewed. It covers registered investment advisers, registered investment companies, and business development companies. Permitted custodians of crypto assets that are funds or securities would include banks, broker-dealers, futures commission merchants, and state-chartered trust companies that their state banking regulator has authorised to custody crypto and that keep written safeguarding policies. Atkins called it a compliant pathway where none existed before. A pathway in a proposing release is a draft. It is not a custodian you can hire today under a finished rule.
The phrase that will be misread is self-custody. Commissioner Hester Peirce, in her statement on the way out — her last day at the Commission was 2 October — noted that the proposal means the adviser acting as custodian, not the client holding their own keys. If a headline says the SEC “legalised self-custody”, it has swapped the firm for you.
What happened
An adviser could hold client crypto itself only if several conditions are met. It must determine, each quarter, that no permitted custodian is available. It must document its expertise for each asset. Every transaction needs two-person authorisation. There is an annual cybersecurity review, internal-control reports, and quarterly statements to clients that list addresses and transactions. A new fund rule would let a regulated fund hold crypto through its adviser on the same conditions, with the fund’s board watching. The proposal also drops the requirement that the accountants who examine custody-rule compliance be registered with and inspected by the PCAOB. Comments run 60 days after publication in the Federal Register. Until that clock starts and a final rule exists, the 2026 text changes nothing in your advisory agreement.
This proposal replaces a 2023 safeguarding proposal the Commission withdrew in June 2025. Critics of that older draft said it would have shut most advisers out of crypto. Withdrawing a draft and publishing a different draft is two process steps. Neither is a statute. The CLARITY Act, which would have pre-empted more of the state custody patchwork, failed a Senate motion to proceed on 15 September. State trust companies in this proposal are a Commission attempt to name a custodian class using powers it already has. A later commission can rewrite the list.
Why it matters
If you pay an adviser, the question is who can sign for the coins and what statement you receive. Two-person authorisation and a quarterly address list are controls on the firm. They are not a hardware wallet in your desk. If you already hold your own keys, this release is about other people’s managed accounts. See how crypto wallets actually work, and an exchange balance is an IOU, not a wallet. An adviser balance is a third species: a regulated firm’s books, with a custodian that might be a bank, a broker, a state trust company, or the adviser itself if the conditions stick.
“Your adviser can now custody bitcoin” is the caption. The instrument is a proposal with a quarterly finding that nobody else will do it. That finding is a memo in a compliance file. It is not permission for every app that calls itself an adviser. See regulation is a process memo, not permission.
What happens next
Federal Register publication, a 60-day comment file, and a final rule that may look different. The Commission has been at two members since Peirce left — Chair Atkins and Commissioner Mark Uyeda — which is a quorum fact for whatever vote eventually adopts or shelves this. Watch sec.gov for IA-7023. We will not tell you to move coins to an adviser, or away from one, because a proposal used the word custody.
Not legal, tax, or investment advice. Not a recommendation of any adviser, trust company, or crypto asset.
