Overview
Landmark SEC proposed rulemaking (October 1, 2026; Release IA-7023 / IC-36353) establishing a compliant custody framework for crypto assets held by registered investment advisers and regulated funds under the Advisers Act and Investment Company Act.
Timeline
- 2026-10-01: SEC proposes conditional self-custody, state trust company custodians, and modernization of decades-old custody rules (2026-10-05-sec-crypto-custody-rules-proposal)
- 2026-10-06: Federal Register publication scheduled (2026-10-06-sec-crypto-custody-federal-register)
- 60-day comment period after Federal Register publication
Key Elements
Self-Custody (Conditional)
- Permitted only when no qualified custodian will hold the asset
- Quarterly reassessment; adviser alone possesses private keys
- Two-person transfer authorization, cybersecurity reviews, independent control reports
- Quarterly client statements required
State Trust Companies
- New qualified custodian category under Rule 223-1 (Advisers Act) and Rule 17f-8 (Investment Company Act)
- Crypto assets and related cash equivalents only
- State supervision and examination required; no federal “bank” determination
Modernization
- Redesignates Advisers Act custody rule; updates audit provisions, broker-dealer custodian rules
- Chairman Paul Atkins: “clear regulatory framework… compliant pathway where none existed before”
Key Players
- sec
- modern-treasury
- State-chartered trust banks
Analysis
Closes long-standing crypto custody gap for RIAs and regulated funds. Enables modern-treasury-style trust bank strategies and adviser self-custody for assets no custodian will hold. Proposal not final — comment period and potential litigation ahead.