The US Securities and Exchange Commission on October 1, 2026 formally proposed new custody rules for crypto assets held by registered investment advisers and regulated funds, filing the package under File No. S7-2026-35 and titled "Adviser and Regulated Fund Custody Rules; Crypto Custody Rules."

The proposal, driven by the SEC's Crypto Task Force, aims to modernize custody standards and create a durable path for crypto investment advice at registered firms. It converts interim guidance issued in 2025 into a potential formal regulatory framework. The full document is posted on SEC.gov as a PDF of approximately 3.54 MB.

What does the proposal actually change?

According to the Commission, the rules update existing custody regulations to reflect digital assets and improve transparency in how firms handle reporting and recordkeeping. The framework is designed to help advisers and funds meet their ongoing obligations under two foundational statutes: the Investment Advisers Act and the Investment Company Act.

For registered advisers, the operational stakes are concrete. Firms that want to advise clients on crypto holdings need a compliant custody chain. The new framework signals how the SEC expects that chain to be constructed, documented and audited.

How did the SEC get here?

The route to the October filing was not linear. The SEC put out a broader safeguarding proposal in 2023. That effort was proposed, debated, and ultimately withdrawn in June 2025, clearing space for a revised approach.

In September 2025, the SEC issued a no-action letter permitting select state-chartered trust companies to serve as qualified custodians for crypto assets. That letter gave those institutions a foothold in the crypto custody market, and interim guidance issued in 2025 bridged the gap while the agency drafted permanent rules.

The new proposal builds directly on that guidance, turning temporary accommodations into a potential formal framework. The final rule could cement the position of the state-chartered trust companies that benefited from the 2025 relief — or reshuffle it, depending on how the comment process shapes the eligibility criteria.

Before the October release, the proposal passed through a White House checkpoint. It had been under review by the Office of Management and Budget since approximately August 25, 2026.

What happens next?

The proposal is not final. The SEC will accept public comments for 60 days after the proposal is published in the Federal Register. That clock starts at publication, not at the October 1 unveiling, so market participants should watch the Federal Register entry for the operative deadline.

The history here counsels caution. The 2023 safeguarding proposal followed the same procedural arc — proposal, comment, withdrawal — which demonstrates that a proposal is a starting point rather than a guarantee. Custodians, advisers and fund complexes now face a 60-day window to shape the qualified-custodian definition before the SEC moves toward adoption.