SEC proposes crypto self-custody rules for investment advisers and funds: the conditions and what they mean for you

What the SEC proposed

On October 1, 2026, the US Securities and Exchange Commission (SEC) published a package of new rules and amendments on how crypto assets are held in custody. It covers two groups of market participants. The first is registered investment advisers (RIAs), who manage clients' money. The second is regulated funds: investment companies and BDCs (business development companies).

The custody requirements for these firms were written decades ago, in the Investment Advisers Act of 1940 and the Investment Company Act of 1940. According to the SEC, the goal of the proposal is to update those rules and remove the barriers that made it hard for advisers to offer crypto investments to clients.

The package has three parts:

1. Self-custody. An adviser could hold clients' and funds' crypto assets itself in limited cases, including when it has determined that no permitted custodian is available for those assets.
2. State trust companies. State-chartered trust companies could act as custodians of clients' and funds' crypto.
3. Broker-dealers and audits. Requirements for broker-dealers that hold fund assets are updated, and the rules on audits of advisers' financial statements are modernized.

For now this is only a proposal, not a rule in force. Once it is published in the Federal Register, the public will have 60 days to comment. The SEC has not yet announced the publication date.

What the SEC means by self-custody

In crypto, "self-custody" usually means a wallet where you hold your own keys, and we have covered the difference between a custodial and a non-custodial wallet in detail. In the SEC document it means something else. SEC Commissioner Hester Peirce, as The Block reports, clarified that the term refers to an adviser acting as the custodian of its clients' assets. It has nothing to do with a private investor keeping coins on their own.

In other words, the regulator is spelling out how a professional managing other people's money can hold crypto on its own keys rather than with a bank or a specialized custodian. For a private holder it's simpler: coins bought through a cryptocurrency exchange and sent to your own address are already in your hands, with no custodian involved.

Conditions for advisers

An adviser can't just take the keys. According to securities.io and Cointribune, it has to meet a whole list of conditions:

• determine in writing that no suitable custodian is available, before custody begins and then every quarter;
• have proven experience holding assets with a private key management system;
• use joint authorization: at least two people approve every crypto asset transaction, and the procedure is reviewed at least once a year;
• keep client assets at separate crypto addresses;
• test its cybersecurity measures once a year;
• obtain an independent auditor's report on internal controls within six months, and then every year;
• send clients quarterly statements;
• sign a written agreement under which crypto is treated as a financial asset under state law.

For funds, the fund's board of directors also oversees the arrangement.

State trust companies as custodians

The second notable part of the package deals with trust companies chartered by individual states. To hold the crypto of an adviser's or fund's clients, such a company must:

• have permission from the state banking regulator to hold crypto in custody;
• keep written safekeeping policies;
• have audited financial statements and internal control reports;
• keep client assets separate from its own.

The adviser or fund checks the trust company's authorization before starting and then every year.

Where the proposal comes from

The topic has a long history. In 2023 the SEC proposed the Safeguarding Advisory Client Assets rule on protecting advisers' client assets. In June 2025 it was withdrawn.

On September 30, 2025, the SEC issued a no-action letter, a non-binding staff position. It allowed state trust companies, under certain conditions, to be treated as suitable custodians. The new proposal turns that position into a rule.

There is a wider backdrop too. The Block writes that the SEC and the CFTC sped up their work on crypto rules after the CLARITY Act failed to pass the Senate.

What the SEC says

SEC Chairman Paul Atkins noted that since Bitcoin appeared in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class that investors are actively seeking access to. In his words, the proposal gives advisers and funds a lawful path where there was none before. Atkins also said more regulatory proposals from the SEC are on the way.

Does this affect ordinary holders

Not directly. Holding crypto on your own keys is already allowed in the US, and you don't need SEC permission for it. If you, say, swapped USDT to ETH and keep it in your own wallet, the new rules don't apply to you. Peirce stressed separately that the proposal is not about private investors. It is about people who manage other people's money and answer to clients.

Similar debates about self-custody are happening in other countries too. For example, we wrote about how Brazil introduced reporting on transfers to personal crypto wallets.

Still, the SEC document is worth reading even if you keep a few coins on your phone. The regulator has essentially described how to hold keys safely yourself when other people's money is at stake. Private holders have been given almost all of the same advice for years.

A self-custody wallet checklist inspired by the SEC

Here is how the conditions for advisers translate to an ordinary wallet. The SEC sets no rules for individuals, this is just a handy framework.

The key point of this table is the keys. If your coins sit on an exchange, the exchange controls the keys, not you.

If you hold the keys, all your protection rests on the seed phrase. We covered how to back it up without losing it in our guide on how to store a crypto wallet seed phrase safely.

And if you'd rather keep bitcoin yourself than in an exchange account, on VertEXchange you can exchange USDT TRC20 to bitcoin without registration. No account is needed, and the coins go straight to your wallet.

FAQ

What did the SEC propose on October 1, 2026?

A crypto asset custody framework for registered investment advisers and regulated funds. Advisers could hold client crypto themselves in limited cases, state trust companies could serve as custodians, and requirements for broker-dealers and audits are updated.

Do I now need SEC permission to keep crypto in my own wallet?

No. The proposal applies to advisers and funds that hold other people's assets. SEC Commissioner Hester Peirce clarified that "self-custody" here does not mean a private investor holding their own crypto.

What conditions does the SEC set for advisers to self-custody crypto?

They include a written determination that no suitable custodian is available, approval of every transaction by at least two people, separate crypto addresses for client assets, yearly cybersecurity testing, an independent auditor's report and quarterly statements to clients.

When will the SEC crypto custody rules take effect?

For now it is a proposal. After publication in the Federal Register, the public will have 60 days to comment, and the publication date has not been announced yet.