The SEC has proposed a custody regime that would formally place state-chartered trust companies inside the qualified-custodian framework and allow registered investment advisers to self-custody crypto assets that no permitted custodian supports. The proposal, subject to a 60-day comment period after Federal Register publication, shifts competitive dynamics away from charter status and toward asset coverage, service breadth and integration.

The rules would formalize a path that has operated under staff no-action relief since September 2025, when SEC staff said they would not recommend enforcement against advisers and funds treating qualifying state trust companies as permitted crypto custodians. Registered advisers and funds have historically operated inside a custody framework built around banks, broker-dealers and other regulated institutions. Crypto exposed a gap: many assets investors want are not supported by traditional custodians, while some of the firms best equipped to hold them — state-chartered trust companies — have had less straightforward status under federal custody rules.

The proposal imposes safeguarding policies, financial audits, internal controls and asset segregation on state trust companies, and substantial conditions on adviser self-custody.

Who gains a clearer regulatory lane?

Coinbase, Gemini and Fireblocks have built regulated custody businesses around trust charters rather than conventional commercial-bank models. Coinbase Prime custody runs through Coinbase Custody Trust Company, a New York-chartered trust company regulated by NYDFS that advertises support for more than 470 assets. Gemini Custody operates through Gemini Trust Company, and Fireblocks has added its own NYDFS-chartered Fireblocks Trust Company alongside its institutional wallet and transaction infrastructure.

The proposal cuts against firms that spent years moving toward federal structures. Anchorage Digital obtained a federal charter in 2021, and BitGo and Fidelity Digital Assets have pursued federally regulated custody structures. Those structures retain advantages with institutions that prefer a federal banking framework, but the SEC's proposal makes them less exclusive as a route into regulated custody.

Why the asset list becomes the product?

The rule governing unsupported assets may prove the most consequential competitive detail. An adviser could self-custody a crypto asset only after determining that no qualified custodian will hold it, and that determination must be revisited at least quarterly. If a custodian subsequently adds support, the adviser must move the asset to that custodian as soon as reasonably practicable.

That turns asset coverage into a customer-acquisition tool. A fund interested in an emerging token might initially use its adviser's own infrastructure because no qualified custodian supports it. Coinbase, Fireblocks Trust, Gemini or another provider could then add the asset and create a regulatory reason for the adviser to move it onto that platform. For crypto issuers, the logic reverses: qualified-custodian support could become part of institutional distribution, because exchange liquidity matters less if regulated investors cannot operationally hold the asset.

What does self-custody actually cost?

The proposal treats self-custody as a fallback rather than a broad substitute. The Commission estimates the specified self-custody requirements would cost an adviser about $433,833 annually on average, including roughly $376,000 for the required internal-control report. Because those costs are largely fixed, the option may be limited to firms with enough scale to justify it.

The requirements create business elsewhere in the stack. Fordefi sells institutional self-custody infrastructure built around MPC key management and policy controls, while Fireblocks operates on both sides — selling institutional wallet infrastructure and running a qualified custodian. Cybersecurity firms, compliance providers and accounting firms testing internal controls also benefit when an institution keeps assets in-house. Self-custody changes which intermediaries get paid rather than eliminating them.

Can incumbent banks defend their position?

Traditional custody banks have reason to watch. The Bank Policy Institute, Association of Global Custodians and Financial Services Forum warned the SEC last year that crypto custody outside the conventional qualified-custodian framework should face safeguards equivalent to those imposed on banks. Together, custodian banks held more than $234 trillion in customer assets globally in 2024, according to the groups.

The SEC did not dismiss those concerns outright — its proposal imposes segregation, control and oversight requirements — but it challenges the premise that sitting inside the traditional bank perimeter should determine who can compete. BNY operates a digital-asset custody platform and is adding staking through a partnership with Galaxy; State Street has launched a digital-asset platform covering custody, wallet management and infrastructure for tokenized funds and stablecoins. Their advantages — client relationships, cash management, fund accounting, administration and portfolio integration — remain hard for a crypto startup to replicate with a trust charter.

The pressure is commercial rather than existential. If custody eligibility broadens, BNY and State Street must win crypto business on capabilities instead of regulatory scarcity. Crypto-native firms gain a clearer lane but still must persuade institutions to split relationships away from banks servicing the rest of their portfolios.

The final rule could change after the comment window closes. What is already clear is the direction: custody competition will center on asset coverage, speed of support and integration with trading, staking and fund administration — and qualified-custodian listing may become almost as important to crypto issuers as exchange listing.