What the SEC Proposed
On October 1, 2026, the U.S. Securities and Exchange Commission proposed a new framework for how investment advisers and regulated funds can hold crypto assets for their clients. It is the clearest legal path yet for institutions that want direct exposure to digital assets.
Key Points
- State-chartered trust companies could act as qualified custodians for client and fund crypto.
- Self-custody is allowed only if an adviser determines that no qualified custodian exists for a specific token.
- That determination must be reassessed every quarter.
- If a custodian later becomes available, assets must be moved "as soon as reasonably practicable."
- A 60-day public comment period starts after publication in the Federal Register.
Why It Matters
Custody has long been one of the biggest obstacles for pension funds, RIAs and asset managers considering crypto. Clear rules reduce legal risk and could unlock new institutional flows — especially into smaller tokens that big custodians do not yet support.
The move comes after the Clarity Act stalled in the Senate, pushing the SEC and CFTC to build the rulebook themselves. It also lands during a strong stretch for the market: U.S. spot Bitcoin ETFs pulled in about $2.65 billion in September, flipping net positive for 2026, and Bitcoin traded above $86,000 on October 2. Citigroup this week raised its 12-month Bitcoin target to $113,000.
What's Next
The proposal is not final. Expect heavy feedback from the industry, particularly on the self-custody conditions and the quarterly reassessment requirement.
