SEC PROPOSES CRYPTO CUSTODY RULES FOR ADVISERS AND FUNDS — SELF-CUSTODY ONLY WHEN NO PERMITTED CUSTODIAN IS AVAILABLE — STATE TRUST COMPANIES COULD HOLD CLIENT COINS — PEIRCE: “ZEALOUSLY PROTECT” THE RIGHT TO SELF-CUSTODY

The SEC proposed custody rules for investment advisers and funds on October 1, 2026. Two doors open. Advisers and funds could keep client crypto at a state trust company. They could also hold it themselves "under certain circumstances." Chairman Paul Atkins said the point is "replacing the grey of uncertainty created by custody rules crafted for a bygone era."

The circumstances are the story. Under the SEC fact sheet, an adviser can self-custody a client's coins only if it "determines that a permitted custodian is not available to maintain the crypto asset prior to taking self-custody." Commissioner Hester Peirce's statement says that check repeats every quarter. The adviser also has to document its own safeguarding expertise, get an outside accountant's internal control report within six months and every year after, and send clients statements at least quarterly. Every transaction needs sign-off from at least two people.

Bitcoin has no shortage of custodians. Banks qualify, and state trust companies would too under this draft. So as written, the self-custody door looks built for coins nobody will hold, not for bitcoin. Peirce, in a statement dated the day before she leaves the Commission, wrote: "Regulators should zealously protect investors' right to self-custody and not attempt to force investors to custody their assets with someone else."

This rule covers advisers holding other people's money. It does not touch a person holding their own keys. Comments run 60 days after the proposal is printed in the Federal Register, and the fight will be over one word: available. At the time of this writing, bitcoin was $84,613.