Following the failure of the CLARITY Act to advance, the US Securities and Exchange Commission (SEC) has proposed new rules aimed at establishing a clearer framework for how registered investment advisers and regulated funds custody crypto assets. The regulatory effort addresses how digital assets are held under federal securities laws.
Addressing Crypto Custody Uncertainty
The proposal seeks to remove regulatory barriers affecting advisers providing crypto-related investment advice. Under the suggested changes, digital assets could be held via state trust companies under certain circumstances, and the rules would also permit self-custody arrangements under specific conditions.
According to the SEC, the proposal offers regulated funds additional options for offering crypto-linked investment strategies and updates financial statement audit requirements for registered investment advisers, alongside broker-dealer custodial services.
SEC Chairman Paul S. Atkins noted that existing custody rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 were designed for traditional assets, predate the internet, and fail to adequately address modern crypto assets. Atkins stated that the proposal aims to replace uncertainty with a structured framework that reflects current industry practices.
Broader Regulatory Approach
Atkins described the proposal as part of a comprehensive crypto asset regulatory approach following the end of regulation by enforcement. Additional steps include a December 2025 no-action letter issued to the Depository Trust Company regarding a securities tokenization pilot program, and a January 2026 staff statement providing a tokenization taxonomy.
With broader legislation stalled, attention has shifted to existing agency authority. The SEC's proposed changes are not yet final, and the agency has opened a 60-day public comment period.
