The Securities and Exchange Commission on Wednesday proposed a tailored framework governing how registered investment advisers and regulated funds can custody crypto assets, moving to resolve a compliance bottleneck that has kept many professional money managers out of digital-asset strategies.

The proposal, issued under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, would clarify which crypto arrangements satisfy the long-contested "qualified custodian" standard. It would permit self-custody under certain conditions, allow state trust companies to serve as custodians for client and fund crypto, and update rules around financial-statement audits for advisers and broker-dealer custodial services for funds.

The stakes are structural. Advisers must keep client assets with qualified custodians that meet strict safekeeping standards, but regulators have never clearly defined which crypto arrangements pass that bar. That ambiguity left firms hesitant to offer crypto strategies at all. The SEC's stated goal is to widen investor access by removing those barriers.

What did Chairman Atkins say?

SEC Chairman Paul Atkins framed the proposal as an overdue modernization. "Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure," Atkins said in a statement.

He added that the agency's rules "have not kept pace" and that the proposal would replace "the grey of uncertainty created by custody rules crafted for a bygone era."

How does the proposal fit the broader SEC agenda?

The custody plan forms the latest piece of a regulatory build-out the SEC has pursued since the Clarity Act stalled in the Senate. The agenda includes:

• An "innovation exemption" allowing tokenized stocks to trade on-chain
• A proposed crypto-fundraising framework dubbed Regulation Crypto Assets
• Staff guidance clarifying that token buybacks do not by themselves make a crypto asset a security

Together, these moves reflect a shift in which crypto firms have stopped waiting on Congress and instead lean directly on regulators for workable rules.

What happens next?

The proposal is not final. A 60-day public comment period will open once the rule is published in the Federal Register. After comments close, the agency can revise the rules before any vote to adopt them — a process that historically takes months, leaving advisers to operate under existing custody ambiguity in the interim.

For fund managers and custodians, the operational consequences are concrete. If adopted, state trust companies could compete directly for institutional crypto custody mandates, and qualifying self-custody arrangements could reduce reliance on third-party custodians — reshaping the compliance architecture advisers build around digital-asset offerings.