SEC proposes writing its state trust company crypto custody letter into rule

The trust company permission in the draft ^[2] predates it. The staff letter and the proposal are 366 days apart ^[1], so on its first day the rule mostly turns an arrangement some firms could already use into a regulation. The agency's earlier crypto custody statements dealt mainly with broker-dealers under Rule 15c3-3 ^[17]. This one is written under the Advisers Act and the Investment Company Act of 1940 ^[18]. It covers advisers holding client crypto and funds managing crypto securities ^[3].

SEC Chairman Paul Atkins framed the gap in market terms. "Since the advent of Bitcoin in 2008, the crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure," he said ^[10]. He added that the proposal would replace "the grey of uncertainty created by custody rules crafted for a bygone era" ^[11]. The reports do not include a custody fee, an asset figure, a count of qualifying trust companies or the conditions attached to self-custody.

The final text can go one of three ways. If the final conditions track the letter's, the list of trust companies holding adviser and fund crypto barely changes. If they loosen, the field of eligible firms "could get much wider," in Crypto Briefing's phrase ^[14]. The third outcome comes from the self-custody provision ^[4]. If it means an adviser or fund holding its own keys, those assets need no third-party custodian, and the custody fee leaves with them.

I think the first outcome is the likeliest and the third would move the most money. Neither can be sized until the conditions are public. The case against the first lies in the letter's scope. Crypto Briefing describes it as covering "select" trust companies ^[16], so a broadly drawn rule could widen the field well past the firms already relying on it. A final rule that admits many trust companies outside the letter's group would prove the first view wrong. Self-custody conditions so narrow that no adviser uses them would end the third.

The SEC is building this by rule while the Clarity Act sits stalled in the Senate. The same push has produced an innovation exemption for on-chain tokenized stocks and a fundraising framework called Regulation Crypto Assets ^[13]. The draft spent about 37 days under Office of Management and Budget review before its release ^[2]. The agency's previous custody effort, a 2023 safeguarding proposal, was withdrawn in June 2025 ^[7].