Securities and Exchange Commission (SEC) Chairman Paul Atkins admitted today that federal securities rules have failed to keep pace with Bitcoin’s rapid growth since its launch in 2008.
The agency responded with a new proposal designed to modernize how advisers and funds custody crypto assets.
What Is the SEC’s New Crypto Custody Proposal?
The proposal amends the Investment Advisers Act and the Investment Company Act to create clearer custody rules for digital assets.
It lets registered investment advisers and regulated funds, including mutual funds, hold crypto under a framework built for today’s market instead of decades-old guidance.
Atkins said current rules “have not kept pace” with an asset class that grew from a niche experiment into a multi-trillion-dollar market. He framed the proposal as a replacement for the uncertainty created by outdated custody standards written long before crypto existed.
“To that end, today’s proposal would provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before—and replacing the grey of uncertainty created by custody rules crafted for a bygone era,” Atkins said in an official statement.
Two provisions stand out.
- Advisers could let clients self-custody crypto assets under specific conditions.
- State-chartered trust companies could also qualify as custodians, expanding beyond the banks and broker-dealers that traditionally held that role.
The proposal arrives weeks after the CLARITY Act stalled in the Senate. Lawmakers failed to advance that broader market-structure bill on September 15, leaving the SEC to act through rulemaking instead.
Why Does This Custody Change Matter for Investors?
Outdated custody rules have long limited how advisers offer crypto-related guidance to clients. Funds also faced barriers when trying to provide broader access to digital asset strategies through compliant channels.
Atkins tied the proposal to a wider push to make the United States the world’s leading crypto hub. That effort already includes ending regulation-by-enforcement tactics and building clearer tokenization frameworks for the industry.
The public comment period stays open for 60 days once the proposal appears in the Federal Register. Stakeholders are expected to weigh in on the self-custody provisions and the expanded custodian role for state trust companies.
This marks one of the clearest regulatory shifts under Atkins so far. It gives institutional investors a defined, compliant path into Bitcoin and other digital assets. Reduced legal ambiguity could accelerate mainstream adoption that previous rules had effectively discouraged for years.
Source: BeInCrypto
