The U.S. Securities and Exchange Commission on Thursday proposed a crypto custody rule that would, for the first time, give registered investment advisers a compliant pathway to safeguard clients' digital assets, marking the final major deliverable on Chairman Paul Atkins' digital asset agenda.

The proposal opens a 60-day public comment period. It defines which firms qualify as qualified custodians for crypto held by investment advisers and funds, permits state-chartered trust companies to act in that role, and authorizes self-custody "under certain circumstances" not detailed in Thursday's release.

What does the rule actually change?

For decades, the adviser-custodian framework assumed assets were held by a broker-dealer, bank, or futures commission merchant. Crypto did not fit.

The proposal tries to close that gap on three fronts. First, it sets standards for which entities can act as qualified custodians for crypto. Second, it specifies recordkeeping and federal disclosure requirements for those holdings. Third, it carves out a narrow self-custody path, conditional on safeguards the release does not yet specify.

SEC Chairman Paul Atkins framed existing custody rules as built around "the custody and safekeeping only of traditional assets — an untenable situation in the 21st century." He added that the 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."

The rule also brings state-chartered trust companies into the qualified custodian definition, paired with new audit obligations for how custodians account for client crypto.

Who exits, and what remains?

The custody filing lands one day before Commissioner Hester Peirce leaves the agency. Peirce, who has led the SEC's Crypto Task Force since its creation, steps aside on Friday. She will join a Virginia university as a professor.

Her departure reduces the Commission to two sitting members. The custody proposal, however, has cross-ideological support from Atkins and the remaining Democratic commissioner.

With custody addressed, Atkins' stated crypto agenda is now complete. The agency has previously moved on tokenized securities distribution and exchange-traded product structures.

What are the operational consequences?

Registered advisers will need to reassess vendor relationships once the rule finalizes. Custody providers that do not meet the new qualified-custodian bar will lose institutional mandates. State-chartered trust companies gain a federally recognized on-ramp but inherit new audit obligations.

Self-custody, even in narrow circumstances, will require firms to build internal control frameworks they have not previously maintained.

The comment period closes in 60 days. A final rule could plausibly land within twelve, depending on the rulemaking docket and the volume of industry responses.