SEC Opens 60-Day Comment on Bitcoin (BTC) Custody Rule for Investment Advisers

A Custody Pathway Built for Advisers

The U.S. Securities and Exchange Commission on Thursday proposed a dedicated custody rule for digital assets, giving registered investment advisers and regulated funds a compliant path to hold client crypto under federal securities law for the first time. The draft is open for a 60-day public comment period and replaces custody provisions that were written decades before consumer internet access existed. According to the formal proposal published on the SEC newsroom, the text clarifies which types of firms may properly hold crypto assets, how advisers and regulated funds must keep records, and what federal disclosures and audit requirements would apply. Two provisions stand out. The draft would allow self-custody of crypto assets under certain circumstances, a notable shift for an agency that has long steered client assets toward third parties, and it would permit state-chartered trust companies to serve as custodians. SEC Chairman Paul Atkins framed the move as closing a gap left by rules crafted for traditional assets, arguing that requiring advisers to fit digital holdings into a framework built for stocks and bonds is untenable. The stakes are practical: advisers that today improvise with cold-storage setups or accounts at a crypto exchange would gain an explicit federal standard, and self-directed holders who manage their own crypto wallet arrangements would see a clearer boundary between permissible and non-permissible custody models. The proposal also touches auditing, an area that has produced years of friction between audit firms and digital asset businesses over how holdings are verified. Institutional flows remain a standing pillar of the bull market case for the Bitcoin price, which is why a defined custody pathway under the Investment Advisers Act and the Investment Company Act carries weight well beyond the SEC itself.

The timing is inseparable from personnel. The proposal lands one day before the departure of Commissioner Hester Peirce, who has led the agency's Crypto Task Force since its inception and leaves the SEC on Friday for a professorship in Virginia. Her exit leaves the commission with just two commissioners, a thinner bench for the eventual vote on any final rule. Atkins, in the statement accompanying the release, said the draft answers a recurring complaint from institutional investors: that qualified custody infrastructure simply does not yet exist for some crypto assets. He described the package as a modernization of the entire custody regime under both statutes, not a narrow patch, and argued the current rules were built to protect advisory clients and regulated funds from loss, theft, misuse and misappropriation while covering the safekeeping of traditional assets only. With custody now on the table, the agency has moved on every major item on the crypto agenda Atkins set out when he took office. Trading desks, market maker operations and registered funds that hold digital assets for clients have all been waiting on one definition: who may act as custodian. The 60-day window gives custodians, platforms and adviser trade groups their chance to push for changes before the commission drafts the final version.

A Proposal, Not Yet a Final Rule

COINOTAG's reading of the filing: this is a proposed rule, not a final one, and the distinction governs everything that follows. Once adopted, the framework would bind investment advisers and regulated funds under the Investment Advisers Act and the Investment Company Act, but with comments open for 60 days from October 1, no effective date exists yet, and the text can change. Even in draft form, however, a formal custody pathway removes the largest structural objection institutions have cited for keeping crypto allocations off the books.