The Securities and Exchange Commission has proposed new rules and amendments it said would provide a framework for the custody of crypto assets for registered investment advisers and regulated funds.
Officials with the SEC said the proposal would modernize custody rules and expand investor choice by removing regulatory barriers that could inhibit the adviser’s ability to give crypto-related investment advice, while allowing regulated funds to offer clients the ability to access a wider range of crypto asset-related investment strategies.
“Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure. Unfortunately, our rules and regulations have not kept pace. To that end, today’s proposal would provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before—and replacing the grey of uncertainty created by custody rules crafted for a bygone era,” SEC Chairman Paul S. Atkins said in a statement.
Under the proposal, a number of requirements relating to financial statement audits for registered investment advisers and broker-dealer custodial service for regulated funds would be updated to address current industry practices. Additionally, the proposal would permit crypto assets to be held in self-custody in certain circumstances, and allow the use of state trust companies as custodians for client and regulated fund crypto assets.
Once the proposed rules and amendments are published on the Federal Register, a 60-day public comment period will be opened.