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[BUSINESS] · United States · 38 sources

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SEC proposes new crypto custody rules for advisers and funds

The U.S. Securities and Exchange Commission (SEC) has proposed a new regulatory framework to modernize how investment advisers and regulated funds, such as business development companies, custody digital assets. SEC Chair Paul Atkins noted that the crypto market has evolved into a multi-trillion-dollar asset class, but existing regulations designed for traditional assets have not kept pace with technological advancements.

The proposal introduces two primary pathways to address the current shortage of qualified custodians for certain tokens. First, it would allow registered investment advisers to self-custody client crypto assets under strict conditions, including robust cybersecurity safeguards, private key protection, and a requirement for at least two-person authorization for transfers. Advisers must also reassess the availability of qualified custodians on a quarterly basis. Second, the framework would permit state-chartered trust companies to serve as qualified crypto custodians.

Economic analysis by the SEC estimates the annual cost of self-custody for an adviser at approximately $433,833, covering compliance and internal control reports, though this excludes significant potential information technology and hardware expenditures. The proposal will be subject to a 60-day public comment period following its publication in the Federal Register.

Entities

Digital Chamber · Hester Peirce · Mark Uyeda · Paul Atkins · Securities and Exchange Commission · U.S. Securities and Exchange Commission

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