Six weeks ago, the Senate buried the CLARITY Act, the bill meant to give America's crypto market actual rules. Congress stalled. Regulators decided not to wait around.
On October 1, the SEC unveiled a proposal on how investment advisers and regulated funds may hold crypto assets for clients. The old rulebook, written for stocks and bonds under a 1940s law, never anticipated bitcoin — advisers are technically required to park client assets with a "qualified custodian," usually a bank or broker-dealer, and most of those still won't touch crypto.
The new draft offers two routes. One: state-chartered trust companies, provided the fund checks their authorization and written safeguards against theft, loss and misuse, then re-verifies annually. Two: narrow self-custody by the adviser itself, only when no suitable custodian can be found, reassessed every quarter rather than approved once and forgotten.
SEC Chair Paul Atkins framed it plainly: bitcoin grew from a niche curiosity into a multitrillion-dollar asset class, and the rules never caught up. Commissioner Hester Peirce added the quieter point — self-custody isn't right for everyone, but plenty of crypto holders care about controlling their own keys.
Public comments stay open for 60 days after Federal Register publication. The proposal sets no uniform security bar for the state trust companies themselves, leaving that to individual states — exactly the gap custodians will likely fight over next.
