SEC Proposes New Rules for Crypto Asset Custody by Investment Advisers and Funds

The Securities and Exchange Commission proposed new rules and amendments to establish a tailored framework for the custody of crypto assets by registered investment advisers and regulated funds, such as registered investment companies and business development companies. This proposal aims to modernize custody rules, remove regulatory barriers to expand investor choice, and allow regulated funds to offer a wider range of crypto asset-related investment strategies. The rules, under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, would also permit self-custody under certain circumstances and allow state trust companies to act as custodians. The public comment period is open for 60 days following the Federal Register publication.