SEC proposes new crypto custody rules for investment advisers and funds

The proposal also lays out certain security and control regulations, and requires advisers to reevaluate every quarter, an SEC official said, and would likely apply to a newly launched token that a custodian didn't yet support.

Atkins said that existing custody rules "were designed to protect the assets of advisory clients and regulated funds from loss, theft, misuse, and misappropriation," but they only consider "the custody and safekeeping only of traditional assets — an untenable situation in the 21st century."

The newly proposed rule, open for a 60-day public comment period, would also allow for self-custody of crypto assets "under certain circumstances" and permit the use of state-chartered trusts as custodians.

The latest move to advance a pro-crypto U.S. securities agenda comes the day before the exit of Commissioner Hester Peirce, who has led the agency's Crypto Task Force since its inception. She leaves on Friday and will be a professor in Virginia, leaving the agency with just two commissioners. The SEC moved to reduce the number of commissioners that are required to form a quorum earlier this week, saying that while in the past it required at least three commissioners, it will now require two. If one of those two commissioners is conflicted out of engaging with a certain action, the remaining commissioner can form a quorum.