The U.S. Securities and Exchange Commission on Monday released a proposed amendment to the custodial rule for investment advisers, allowing advisers and regulated funds to hold cryptocurrency assets for clients through self‑custody, provided they meet a set of risk‑management and reporting requirements.
Regulatory details
Under the proposal, advisers could elect a “last‑resort” self‑custody model that would be permitted only after they demonstrate robust internal controls, segregation of client assets, regular third‑party audits, and sufficient insurance coverage for theft or loss. The rule also mandates written policies on valuation, record‑keeping, and cyber‑security, and requires annual reporting to the SEC. The framework amends Rule 206(4)‑2 of the Investment Advisers Act, which currently limits advisers to using qualified custodians.
Market context
Bitcoin has been trading just under the $85,000 level, a price range that analysts say reflects growing institutional appetite for the digital asset. The new custody proposal is expected to remove a key barrier for pension funds, endowments and other large investors that have been reluctant to allocate capital without clear custodial safeguards.
Industry reaction
Reactions to the draft rule are mixed. TradingView quoted market strategist Paul Atkins as saying the proposal “ends the grey area of uncertainty around crypto,” a sentiment echoed by several adviser‑industry groups that view the change as a “clear‑cut path forward” for institutional adoption. By contrast, CryptoSlate warned that the compliance costs could “threaten small advisers,” giving an advantage to larger firms with existing compliance infrastructures. Yahoo Finance reported that while some firms welcomed the flexibility, others remain skeptical about the adequacy of the proposed insurance and audit standards.
“The SEC’s new framework finally gives advisers a regulatory runway to hold crypto assets directly, which could unlock billions of dollars of institutional capital,” said Paul Atkins, senior analyst at TradingView.
Legal analysts noted that the proposal does not eliminate the need for third‑party custodians entirely; advisers opting for self‑custody must still engage an “independent, qualified custodian” for verification of holdings, a point highlighted by LedgerInsights. The rule also includes a “safe‑harbor” provision that shields advisers from liability if they follow the prescribed safeguards, a feature praised by Barron’s and Wall Street Journal coverage.
Critics argue that the “last‑resort” language may encourage advisers to rely on in‑house solutions without fully appreciating operational risks. CryptoSlate and Incrypted both raised concerns that smaller advisory firms could lack the technical expertise and capital to meet the audit and insurance thresholds, potentially narrowing the competitive field.
The SEC has opened a 90‑day comment period, after which it will consider revisions before finalising the rule, likely in 2027. If adopted, the framework could accelerate the flow of institutional money into Bitcoin, ether and other leading digital assets, further cementing their status as mainstream investment classes.
Market Snapshot
| Asset | Price | 24h | Market Cap |
|---|---|---|---|
 Bitcoin BTC | $84,570 | -2.20% | $1699.2B |
 Ethereum ETH | $2,677 | -2.00% | $326.8B |
 BNB BNB | $767.2 | -1.66% | $102.2B |
 XRP XRP | $1.49 | -2.20% | $93.9B |
 Solana SOL | $119.38 | -2.86% | $70.2B |
 Dogecoin DOGE | $0.0931 | -3.24% | $14.5B |
 Cardano ADA | $0.246 | -3.19% | $9.2B |
Live data: CoinGecko — 2026-10-03 05:20 UTC
