SEC Proposes Allowing Investment Advisors to Self-Custody Crypto Assets

The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, has stated that he has asked staff to develop a proposal that would allow investment advisors to directly custody crypto assets for clients and regulated funds under certain conditions, and is considering allowing state trust companies to serve as custodians. Atkins pointed out that some crypto assets currently lack qualified third-party custodians. This custody proposal is part of the SEC's regulatory framework for crypto, with the SEC's proposed amendments to crypto asset custody rules having entered White House review in August. The framework also includes two other components: the "Crypto Asset Regulation" proposed on August 18 and the modernization of transfer agent rules, which address the issuance and transfer of crypto assets, respectively. Atkins also urged Congress to advance the CLARITY Act, but the bill was not advanced in a procedural vote in the Senate on September 15, with 49 votes in favor and 50 votes against.

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