WASHINGTON — The U.S. Securities and Exchange Commission proposed new custody rules Thursday that explicitly include digital assets, requiring registered investment advisers to hold client crypto with qualified custodians meeting specific SEC standards.
The rule expands Rule 206(4)-2 to cover all client assets, including cryptocurrencies. Qualified custodians must conduct regular audits and segregate client funds. Most current crypto firms do not meet this definition, forcing institutions to restructure custody arrangements.
The timing matters. Bitcoin trades at $84,584, up 1.1 percent over 24 hours. The Crypto Fear & Greed Index sits at 74, signaling sustained institutional appetite despite regulatory headwinds. This rule could accelerate capital flows toward compliant players.
Capital will concentrate at firms already operating within traditional finance frameworks. Fidelity Digital Assets and Coinbase Custody are positioned to capture increased demand. Smaller, unregulated platforms face compliance pressure that may trigger market consolidation—fewer, larger custodians holding institutional assets.
SEC Chair Gary Gensler said the rule ensures client assets are "appropriately segregated and held by a qualified custodian." The proposal enters a public comment period of 30 to 60 days before a final commission vote.
