SEC proposes letting investment advisers and funds self-custody Bitcoin and other crypto

<p dir="ltr">The US Securities and Exchange Commission has proposed a framework that would allow investment advisers and regulated funds to hold Bitcoin and other crypto assets themselves, under certain conditions, and to use state trust companies as custodians.</p><p dir="ltr">The proposal, announced on 1 October and reported by The Block, aims to close gaps in the infrastructure institutions need to hold digital assets directly rather than through exchange-traded funds or other intermediaries. It would apply to investment advisers and regulated funds, a group that includes asset managers and hedge funds. The plan now enters a 60-day public comment period and is not yet a final rule.</p><p dir="ltr">SEC Chair Paul Atkins said the agency's rules had not kept pace with a crypto market now worth trillions of dollars. Commissioner Hester Peirce said regulators should protect investors' right to self-custody rather than force them to hold assets with a third party.</p><p dir="ltr">Why it matters</p><p dir="ltr">Custody has long been one of the practical obstacles for professional money managers considering direct crypto holdings. Current rules generally require advisers to keep client assets with a qualified custodian, which has pushed many toward ETFs as the simplest route into Bitcoin. A clearer framework could make direct ownership more workable. Bullish, at the margin. </p><p dir="ltr">The proposal removes a barrier but does not by itself create demand. It does not require any adviser or fund to buy crypto, and any effect on allocations is likely to be gradual. If adopted, it could also shift some institutional holdings from ETFs into direct ownership. That would make ETF flow data a less complete measure of institutional demand over time.</p><p dir="ltr">The move is part of a wider push by the SEC and the Commodity Futures Trading Commission to update crypto regulation after the Senate failed to pass the Clarity Act. More proposals are expected.</p><p dir="ltr">What to watch next</p><ul dir="ltr"><li>Comment period. Responses over the next 60 days will show whether major asset managers, custodians and banks support the framework or push for changes.</li><li>Final rule. The final rule could differ from the proposal, particularly on the conditions attached to self-custody and the role of state trust companies.</li><li>Follow-on proposals. Further SEC and CFTC proposals could shape how far institutional crypto access is expanded.</li><li>Flows. For market participants, the key test is whether easier custody eventually shows up in allocations, rather than in the headline itself.</li></ul><p>ps. Earlier ETH news:</p><ul><li><a href="https://investinglive.com/cryptocurrency/lubin-linked-wallet-moves-356m-in-eth-beware-any-sell-hype-doesn-t-add-up-yet" rel="follow" target="_blank">Lubin-linked wallet moves $356M in ETH: Beware, any sell hype doesn't add up yet.</a></li></ul><p></p> This article was written by Eamonn Sheridan at investinglive.com.