SEC Crypto Custody Proposal: Can a Fund Hold Its Own Keys?

On 1 October 2026 the US Securities and Exchange Commission proposed rules for how registered investment advisers and regulated funds may hold crypto assets. Two things in the SEC crypto custody proposal are new: advisers and funds could hold assets themselves under certain conditions, and state-chartered trust companies could act as their custodians. Until now the rules these firms follow were written for share certificates and bank vaults.

Key facts

• Date: proposed on 1 October 2026.
• Who it covers: registered investment advisers and regulated funds — not individuals, and not exchanges.
• Self-custody: permitted "under certain circumstances".
• Custodians: state trust companies could qualify.
• Laws involved: rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940.
• Next step: a 60-day comment period once the proposal is published in the Federal Register.

What is the custody rule for?

To keep a manager's hands off client assets.

An adviser who manages your money is normally not allowed to hold it. The assets sit with a qualified custodian — historically a bank or a broker-dealer — so that an adviser who turns out to be dishonest or insolvent cannot take the assets down too. The custodian's records are the independent check.

Crypto broke the fit. Holding a crypto asset means controlling a private key, and for years few of the institutions that count as qualified custodians were able or willing to do that. The SEC chairman, Paul Atkins, described the proposal as "a compliant pathway where none existed before."

What would self-custody mean for a fund?

Not what it means for you.

For an individual, self-custody is one person and one seed phrase. For a fund it would mean the firm controls the keys itself, under conditions the final rule would have to spell out. The questions that follow are the ones the custodian used to answer:

• Who can sign? How many people, and can any one of them act alone?
• Who verifies? If the firm holds the keys and keeps the books, what independent party confirms the assets are there?
• What happens on failure? Lost keys, a departed employee, an insolvency.

The proposal also updates audit requirements, which is where the second question is meant to be answered.

Why do state trust companies matter?

Because they are where much of crypto custody already lives. A trust company chartered by a state is supervised by that state, not by a federal banking regulator, and whether it counts as a qualified custodian has been argued about for years. Saying yes would give advisers a wider set of firms to choose from, and it would put more weight on the quality of state supervision.

Is this a good idea?

It depends on which risk you think is larger. Requiring a third-party custodian concentrates assets in a few firms, and a custodian is a target: September's largest loss came through an exchange's own wallet systems, as the Bitget hack shows. Allowing self-custody removes that concentration and removes the independent check with it.

The useful point is that neither arrangement is safe by default. Safety comes from how keys are split, who must approve a transfer, and whether anyone outside the firm can verify the balance.

That last part is where a public chain helps. An address's balance and history are visible to everyone, so "are the assets there?" can be answered by reading the chain rather than by trusting a statement — on Nura Chain, through the explorer. What the chain cannot show is who controls the key.

This is a proposal, not a rule, and not legal advice. The text and the comment process are on SEC.gov.