The U.S. Securities and Exchange Commission (SEC) has unveiled a new custody framework designed specifically for investment advisers and registered funds that handle cryptocurrency assets. This initiative, announced on October 1, 2023, aims to update the current regulatory landscape surrounding crypto custody, and the source notes that it could significantly expand the options available for these financial entities.
Proposed Framework for Adviser Audits and Custodial Services
The proposed framework seeks to amend existing requirements concerning adviser audits and the custodial services provided by broker-dealers. Notably, the SEC's new approach may permit self-custody of crypto assets under specific conditions, which could significantly impact how advisers manage client funds. Additionally, the proposal allows for the use of state trust companies as custodians, potentially broadening the options available to investment advisers.
Public Comment Phase and Stakeholder Feedback
Despite these advancements, the proposal remains in the public comment phase and has yet to be finalized. Stakeholders in the crypto and financial sectors are encouraged to provide feedback, which will be considered before the SEC makes any definitive changes to the custody regulations.
The Financial Conduct Authority (FCA) recently launched a consultation on updated guidance for crypto businesses, focusing on financial crime controls. This initiative, which will remain open until December 24, 2023, contrasts with the SEC's new custody framework for cryptocurrency assets. For more details, see read more.
