The SEC proposed on October 1 rules allowing investment advisers to custody crypto assets on behalf of clients when no qualified custodian is available, subject to strict safeguards. The modeled annual cost reaches $433,833 per adviser, including $376,000 for the independent internal control report and $57,833 in recurring compliance work, but this figure excludes potentially significant technology costs. The SEC’s economic analysis explicitly acknowledges that smaller advisers may decline to offer this service due to its cost, while larger advisers would have sufficient resources to spread the burden across a broader client base. Required safeguards include key management expertise, cybersecurity protections, annual reviews, and quarterly client reporting, accompanied by independent accountant verifications.
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