SEC proposes digital asset custody rule that would permit limited self-custody

The U.S. Securities and Exchange Commission has proposed a new digital asset custody rule that would let investment advisers and regulated funds custody Bitcoin and other crypto assets under specified conditions, according to BitcoinNews. The proposal would also create a formal regulatory path for state-chartered trust companies to qualify as crypto asset custodians. Under the draft, advisers could self-custody client assets when no qualified custodian is willing to serve a particular digital asset, but only if they meet a set of strict requirements. Those include documenting in writing that a qualified custodian is unavailable, reassessing that determination every three months, using multi-person authorization for transfers, segregating client wallet addresses, and undergoing independent audits. SEC Chair Paul Atkins said the current custody framework was designed mainly for traditional financial assets and no longer fits the development of digital asset markets. BitcoinNews said Bitcoin could be one of the main beneficiaries of the proposal because institutional custody infrastructure for the asset is relatively mature. The rule remains at the proposal stage and has not taken effect.