The SEC has proposed easing custody rules for investment advisers holding crypto assets, allowing them to self-custody client crypto when no eligible custodian is available. The proposal would also permit state trust companies to serve as crypto custodians, subject to specific conditions. Self-custody arrangements would be subject to strict requirements, including quarterly reassessments of custodian availability, cybersecurity measures and dual authorization for any transfer. SEC Chair Paul Atkins acknowledged that the crypto market has grown from a niche curiosity into a multi-trillion-dollar asset class, while admitting that regulations have not kept pace with this development. The SEC will accept public comments for 60 days after the proposal is published in the Federal Register.
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