What happens next in the process?

The proposal enters a 60-day public comment period, during which asset managers, custodians and banks can support it or push for changes. The final rule could differ from the proposal, especially on self-custody conditions and the role of state trust companies. The SEC and CFTC are also expected to issue further proposals on crypto regulation.

Could this affect how institutional crypto demand is measured?

If the framework is adopted, some institutional holdings could move from ETFs into direct ownership, which would make ETF flow data a less complete gauge of institutional demand over time. That shift would be a structural change in where assets are held, not a statement about how much demand exists. Any such migration would likely occur gradually rather than at once.

SEC Proposes Letting Advisers and Funds Self-Custody Bitcoin and Crypto

Q: Why does the qualified custodian requirement matter?

Current rules generally require advisers to keep client assets with a qualified custodian, which has pushed many institutions toward ETFs as the simplest route into Bitcoin. Adding state trust companies as eligible custodians could widen the set of institutions able to serve that role. Custody eligibility matters because it determines who can act as gatekeeper for regulated funds holding digital assets.

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 directly, under certain conditions. The plan, announced on 1 October, now enters a 60-day public comment period and is not yet a final rule.

Disclaimer: News content is based on public news sources and provided for information only. It does not constitute investment advice.

SEC Proposes Letting Advisers and Funds Self-Custody Bitcoin and Crypto

Forexlive·10/2/2026, 03:25:29· crypto

What the Proposal Would Allow

The SEC has proposed a framework that would let investment advisers and regulated funds hold Bitcoin and other crypto assets themselves, subject to stated conditions. Announced on 1 October, the plan would also permit these firms to use state-chartered trust companies as custodians. It applies to a group that includes asset managers and hedge funds, not only the exchange-traded products that have served as the main institutional route into crypto. The proposal is not a final rule: it now enters a 60-day public comment period.

Why Custody Has Been the Practical Barrier

Under existing rules, investment advisers generally must keep client assets with a qualified custodian, a requirement that has limited how directly professional managers can hold digital assets. That constraint has helped make ETFs the simplest route into Bitcoin for many institutions. The proposal is aimed at closing the infrastructure gap for firms that want direct ownership rather than exposure through a fund or another intermediary. It would not require any adviser or fund to hold crypto.

How Officials Framed the Change

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 framed the question around investor choice, saying regulators should protect the right to self-custody rather than force assets to be held with a third party. Both statements indicate the proposal's stated rationale concerns custody arrangements — who holds the asset and under what conditions — rather than whether digital assets belong in portfolios. The conditions attached to self-custody are likely to draw close attention during the comment period.

The Wider Regulatory Context

The proposal is part of a broader push by the SEC and the Commodity Futures Trading Commission to update crypto regulation after the Senate failed to pass the Clarity Act. Including state trust companies as eligible custodians matters because custody eligibility determines which institutions can act as gatekeepers for regulated funds. More proposals from both agencies are expected, meaning the conditions governing institutional crypto access could keep changing. Comment letters over the next 60 days will show whether major asset managers, custodians and banks support the framework or seek changes.

What Could Change Before Any Final Rule

SECcrypto custodyBitcoininvestment adviserscrypto regulation

Frequently asked questions

What did the SEC propose on 1 October?▾

The SEC 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. The proposal was announced on 1 October and is designed to address gaps in the infrastructure institutions need to hold digital assets directly rather than through ETFs or other intermediaries.

Who would be covered by the proposed framework?▾

The framework would apply to investment advisers and regulated funds, a group that includes asset managers and hedge funds. In practical terms, that means the proposal targets professional money managers rather than retail investors. The conditions attached to direct custody will determine which of these firms can actually use the framework.

Does the proposal require advisers or funds to buy crypto?▾

No. The proposal removes a custody-related barrier but does not create demand on its own, and it does not require any adviser or fund to hold crypto assets. Because the framework is permissive rather than mandatory, any change in allocations would likely be gradual and would depend on individual firms' decisions.

Why does the qualified custodian requirement matter?

Key takeaways

What the Proposal Would Allow

Why Custody Has Been the Practical Barrier

How Officials Framed the Change

The Wider Regulatory Context

What Could Change Before Any Final Rule

Common mistakes to avoid

Reacting to a single headline without reading the full context — one data point is rarely the whole story.
Treating rewritten news as a signal — it describes what happened, never what to do next.
Confusing AI-rewritten content with the original source — always verify important facts against the primary report.

SEC Proposes Letting Advisers and Funds Self-Custody Bitcoin and Crypto

What the Proposal Would Allow

Why Custody Has Been the Practical Barrier

How Officials Framed the Change

The Wider Regulatory Context

What Could Change Before Any Final Rule

Frequently asked questions

Key takeaways

Common mistakes to avoid

Related reading

What the Proposal Would Allow

Why Custody Has Been the Practical Barrier

How Officials Framed the Change

The Wider Regulatory Context

What Could Change Before Any Final Rule

Frequently asked questions

Key takeaways

Common mistakes to avoid

Related reading