SEC Proposes Allowing Investment Advisors to Self-Custody Digital Assets Under Certain Conditions

The U.S. Securities and Exchange Commission (SEC) has proposed updates to the digital asset custody rules, allowing investment advisors to self-custody specific assets when no qualified custodian is willing to hold them, provided they meet requirements such as written assessments, multi-party authorization transfers, wallet isolation, and security reviews. The proposal also aims to permit eligible state-chartered trust companies to act as qualified custodians for digital assets like Bitcoin. The proposal has not yet explicitly approved any specific digital assets for investment advisors to custody; if ultimately passed, Bitcoin may benefit due to the more mature existing institutional custody infrastructure.

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