SEC proposes new custody arrangements for advisers and investment funds
The SEC proposed conditional self-custody of cryptoassets and expanded recognition of state trust companies, opening a new debate over institutional Bitcoin custody.
On October 1, 2026, the U.S. Securities and Exchange Commission proposed changes to the custody framework governing investment advisers and regulated funds. The proposal would permit specified cryptoasset self-custody arrangements subject to conditions and allow qualifying state trust companies to serve in the institutional custody structure.
Custody rules determine who can hold client assets and what safeguards an investment business must maintain. For Bitcoin, the distinction has practical force: controlling private keys permits transactions, while delegating custody introduces an intermediary whose operational controls and legal obligations become part of the investor's protection. Recognition as an acceptable custodian can therefore shape which businesses can serve funds and advisers, even when Bitcoin's own transaction rules remain unchanged.
The October action opened a rulemaking process. It did not immediately grant advisers or funds unrestricted authority to hold clients' bitcoin themselves. The proposal's historical significance lay in reconsidering institutional custody arrangements that connect a bearer-style digital asset to securities-market safeguards, rather than in creating a new Bitcoin ownership mechanism.