The U.S. Securities and Exchange Commission (SEC) has proposed a new crypto custody framework that would allow relevant entities to use self-custody under compliant conditions and permit state trust companies to provide custody services. The framework directly concerns investment advisers and regulated funds, is labeled a high-priority regulatory event, and is positioned as a key regulatory pathway for institutions entering the crypto market. This development means that as investment advisers and funds become involved in crypto asset custody, the regulatory framework is beginning to provide a more specific institutional entry point.
In terms of scope, this custody framework is not aimed at all crypto asset holders, but directly targets investment advisers and regulated funds. Public information has not yet disclosed a more complete scope of applicable entities, but it can be confirmed that the framework discussion centers on institutional entities already subject to securities regulation. When investment advisers are involved in crypto asset custody arrangements, they will need to align with the custody pathways and compliance prerequisites listed in the framework; when regulated funds hold crypto assets, they will also need to consider custody arrangements within the framework's scope. Because the scope directly covers investment advisers and funds, the institutional impact of this framework will mainly be reflected in the business arrangements of regulated institutions.
On custody pathways, the framework lists two types of arrangements. The first is self-custody under compliant conditions, meaning relevant entities may control or arrange crypto asset custody themselves after meeting regulatory requirements set by the SEC. The second is custody services provided by state trust companies. The two pathways appear side by side in the framework, indicating that the SEC has not limited the custody model to a single option, but instead provides different arrangements under compliance prerequisites. With both self-custody and state trust company custody entering the regulatory discussion, future rules will need to draw boundaries between the two pathways.
The framework particularly emphasizes the prerequisite of compliance conditions. Currently, public information does not elaborate on the specific conditions, so it is not yet possible to determine which entities can use self-custody, nor whether state trust company custody requires additional qualifications or restrictions. What can be confirmed is that neither self-custody nor state trust company custody is being opened up unconditionally; both require meeting regulatory requirements set by the SEC. Compliance conditions thus become a core issue in the framework's implementation, and subsequent rule details will determine how relevant entities can use these custody pathways.
From the perspective of institutional entry, crypto asset custody connects investors, funds, and underlying assets, and is a foundational component of institutional participation in the crypto market. When allocating to crypto assets, investment advisers and regulated funds need to determine how assets are kept, who keeps them, and whether the relevant arrangements meet regulatory requirements. After the SEC proposed the custody framework, the institutional discussion around custody now has a more specific starting point. Because the framework is currently at the proposal stage, the positioning of state trust company custody and self-custody arrangements in the final rules remains undetermined, and the path forward will depend on the content of the rules.
In terms of regulatory priority, the event is labeled a high-priority regulatory event. Unlike single market movements or project developments, a custody framework represents a change at the institutional level, with its impact mainly reflected in compliance architecture, business access, and how institutions participate. The framework is still at the proposal stage and has not yet formed final rules, so its specific impact will still need to be observed through subsequent rule texts.
Going forward, attention should be paid to further information disclosed by the SEC, including the specific requirements of compliance conditions, the scope of application for state trust company custody, the boundaries of self-custody arrangements, and how investment advisers and regulated funds will implement them. As a high-priority regulatory event, the framework's subsequent developments will continue to affect the U.S. crypto custody regulatory landscape.