The custody proposal would let investment advisers and funds hold digital assets outside an ETF wrapper. It arrives as the Commission shrinks to two members.
For most registered investment advisers, owning bitcoin for a client has meant buying a share of an exchange-traded fund. A proposal released by the Securities and Exchange Commission after Thursday's close could change that by giving advisers and regulated funds a set of custody rules written specifically for crypto assets.
The plan, published as Release 2026-100 on Oct. 1, lays out a tailored framework for how advisers and funds may hold digital assets on behalf of clients. Chairman Paul Atkins said the rules would offer "a compliant pathway where none existed before." The public will have 60 days to comment once the text appears in the Federal Register.
The most notable element is a limited form of adviser self-custody. Under the proposal, an adviser could hold client or fund crypto itself in certain circumstances, such as a situation in which no eligible third-party custodian can be found. Trust companies chartered by states could also serve as custodians, subject to conditions. Funds could hold assets through their adviser with board oversight, and at least two authorized individuals would have to approve any transfer of self-custodied assets.
Commissioner Hester Peirce stressed that the "self-custody" label refers to the adviser stepping into the custodian role; it does not mean individual investors keeping their own private keys. Commissioner Mark Uyeda was more guarded, saying adviser custody creates "an inherent conflict of interest" and that fiduciary duties continue to apply.
Why the wrapper matters
Spot bitcoin ETFs absorbed $2.65 billion of net new money in September alone. That flow exists in part because the fund structure solves the custody problem for advisers. If the SEC finalizes a direct route, the ETF's structural advantage narrows. Beneficiaries would include qualified custodians, state trust firms and platforms that sell custody services, while issuers whose pitch rests on convenience would face a new competitor: the asset itself.
A proposal, not a rule
Nothing changes for advisers today. The proposal must clear a comment period and a final vote, and its durability is an open question. Peirce's last day is Friday, which leaves the Commission with two sitting members. The custody plan is likely the final crypto rule proposal she will help shape, and it rests on agency rulemaking rather than a statute that a future Commission would have to respect.
The release landed at roughly 5 p.m. Eastern, after U.S. markets had closed. Bitcoin rose about 1.6% overnight, but the move fits a broader rebound in flows and rate expectations and cannot be pinned on the proposal.
What to watch: The Federal Register publication date starts the 60-day clock. The comment record, particularly from custodians and state trust regulators, will show whether the self-custody carve-out survives in its current form or is narrowed before a final vote.