SEC Chair Paul S. Atkins on October 1, 2026, signaled that "more regulatory proposals are on the horizon" as the agency unveiled a proposed framework to overhaul how registered investment advisers, investment companies, and business development companies hold digital assets.

The proposal, which opens a 60-day public comment period once published in the Federal Register, attempts to rewrite custody rules that the SEC argues no longer fit assets native to blockchains rather than legacy securities ledgers.

What does the custody proposal actually do?

Two structural changes anchor the draft:

• The framework would permit self-custody of crypto assets, but only under limited circumstances that the SEC has yet to enumerate in granular detail.
• It would allow state trust companies to act as qualified custodians for crypto, widening the universe of institutions eligible to hold assets on behalf of advisers and funds.

The package also updates recordkeeping requirements for both advisers and funds, codifying obligations around the digital asset ledgers they administer.

Atkins pitched the package as a compliant pathway for a sector that has operated in regulatory grey areas. The stated objective is to channel on-chain market development into the US rather than let it migrate offshore.

How does this fit into the SEC's broader crypto agenda?

The custody proposal is the third leg of the agency's 2026 crypto rulemaking push. On August 18, 2026, the SEC proposed Regulation Crypto Assets, which offers tailored exemptions for fundraising of up to $5 million over four years and includes a conditional safe harbor from certain securities definitions.

The pace has been deliberate. Atkins did not preview what the next proposals would cover, but the cadence since August suggests the agency is working through the crypto rulebook section by section.

Legislative momentum has been weaker. The Clarity Act, a separate bill designed to set broader frameworks for the digital asset market, stalled in September 2026.

The proposal also coincides with a personnel transition. Commissioner Hester M. Peirce, a long-standing advocate for clearer digital asset rules, departs the agency after the custody proposal's release, removing one of the Commission's most prominent crypto-policy voices from the discussion.

What does this mean for advisers, funds, and custodians?

The state trust company provision is the most commercially consequential piece for custody providers themselves. Adding a new category of qualified custodian reshapes who can compete for institutional crypto mandates and pressures incumbents to defend existing client relationships.

State trust companies, currently operating under state banking or fiduciary charters, would join banks, broker-dealers, and certain foreign financial institutions as categories eligible to serve crypto mandates. That reclassification carries competitive, audit, and segregation implications for established qualified custodians.

Self-custody is narrower in scope but operationally significant. Allowing advisers to hold certain assets directly, even with limits, changes how they interact with trading desks, counterparties, and prime brokers, and raises questions about internal control attestations when the adviser is also the custodian.

Three milestones will determine the outcome. First, Federal Register publication, which starts the 60-day comment clock.

Second, the additional proposals Atkins flagged. Their scope will reveal how far the agency intends to push into remaining gaps in the digital asset rulebook.

Third, the comment letters from advisers, funds, and custodians. Industry feedback will shape whether the self-custody and state trust company provisions survive intact, narrow further, or expand.

A proposal remains a draft, not a rule, and the comment window exists precisely so the industry and the public can challenge, refine, or endorse the framework before the SEC moves toward adoption.