On October 1, 2026 the Securities and Exchange Commission voted to propose amendments to the custody rules under the Investment Advisers Act and the Investment Company Act, including a crypto-specific framework in Release No. IA-7023. The proposal would let an adviser self-custody client crypto assets when no qualified custodian is available, subject to guardrails, and would allow state-chartered trust companies as permitted custodians if conditions are met. It is a proposal, not a final rule. Legal, compliance, and finance teams at advisers, funds, and the companies that custody or issue crypto for them should read the release and calendar the comment deadline once the Federal Register notice states it.
The SEC on October 1, 2026 proposed the first dedicated path for investment advisers and regulated funds to custody crypto assets without pretending the asset is a paper security. General counsel, chief compliance officers, and fund boards are the audience. The vote opens a comment file. It does not yet change the custody rule advisers must follow tomorrow morning.
This brief is news context for operators, not legal, tax, customs, or investment advice. Confirm dates and filing mechanics with counsel or your broker before changing a procedure.
- What changed? The Commission proposed Adviser and Regulated Fund Custody Rules; Crypto Custody Rules, Investment Advisers Act Release No. 7023, dated October 1, 2026.
- When? Proposed October 1, 2026. It is not effective. The comment clock runs from Federal Register publication.
- Who is affected? Registered investment advisers, regulated funds, state trust companies that want to custody crypto, and issuers or platforms whose tokens sit in advisory accounts.
- What to do this week? Assign an owner to the proposing release, list every crypto asset the firm holds for clients, and note which positions have no qualified custodian today.
What did the Commission propose on October 1?
Chair Paul S. Atkins said the Commission proposed to close a gap that has left advisers and funds guessing how to custody an asset class clients want. The proposal, Adviser and Regulated Fund Custody Rules; Crypto Custody Rules, Investment Advisers Act Release No. 7023 (October 1, 2026), would amend custody rules for registered investment advisers and regulated funds. A major focus is crypto. Commissioner Hester Peirce, in a statement the same day, said the proposal would expand authorized custody options beyond current qualified custodians, who may lack the technology or the willingness to hold certain crypto assets.
Two options drew the clearest statements. First, self-custody: where an adviser determines that no qualified custodian is available, the proposal would permit the adviser to hold client or fund crypto assets, subject to guardrails. Commissioner Mark Uyeda listed safeguarding expertise, cybersecurity protections, annual reviews, internal reporting, account statements, and client disclosures. He also noted that self-custody creates a conflict and that the adviserβs fiduciary duty still applies. Second, state-chartered trust companies could act as permitted custodians for crypto if conditions are met. Before engaging one, and annually after that, the adviser or fund must have a reasonable basis, after due inquiry, to believe the state banking authority authorizes the company to custody crypto and that it has written policies designed to protect assets and related cash from theft, loss, misuse, and misappropriation.
What else is in the custody proposal?
The release is not crypto-only. Commissioner Uyeda said it would also update when regulated funds may use broker-dealers as custodians, and would exclude authorized discretionary trading from the Advisers Act custody rule if executions stay in designated client accounts and the adviser cannot transfer assets to accounts it or a related person controls. Chair Atkins described these as modernizations of custody provisions that have not been amended for decades. Firms that do not touch crypto should still read those sections. A discretionary-trading exclusion changes how some advisers analyze whether they have custody at all.
Why is the SEC moving now?
Atkins framed the vote as part of an effort to give advisers a compliant path where the existing custody rule, written for traditional assets, does not map onto tokens that may have no qualified custodian for months after launch. Peirceβs statement ties the problem to trading venues that are not qualified custodians: moving a crypto asset security to such a platform can leave the adviser in violation of the current rule. The October 1 proposal is the Commissionβs attempt to replace that gray area with conditions, rather than with a ban or with silence. It arrives the same week the Commission also proposed a separate approach to how advisers and funds may custody crypto under the federal securities laws, described in the Chairβs statement as a framework for lawful custody.
What should legal and compliance teams do this week?
Download Release No. 7023 and assign a reader. Build a one-page inventory: crypto assets held for clients or funds, the current custodian, whether that custodian is qualified under the existing rule, and any asset for which no qualified custodian will take the position. That inventory is the fact set the proposal is written for. Do not switch a client position to self-custody, and do not sign a state trust company, on the theory that the proposal already allows it. It does not.
If the firm may want to comment β on the self-custody conflict, on the annual due-inquiry standard for state trust companies, or on the discretionary-trading exclusion β draft the operational facts now. Comment letters that describe a real custody failure mode are more useful than letters that restate the release. Fund boards should get a short note that the proposal exists, that it is not final, and that the comment deadline will be the Federal Register date plus the period stated in the notice. Outside counsel should confirm that period; this brief does not guess it.
What should operators watch next?
Federal Register publication and the comment deadline printed there. Any staff FAQ that tells advisers how to treat crypto custody during the comment period β the current rule still governs. And the Commissionβs vote on a final rule, which is not scheduled. Related dockets worth tracking beside this one include the Commissionβs same-day proposal work on crypto custody and the departure statement for Commissioner Peirce, also dated October 1, 2026, because the vote split and the written statements are part of how a final rule will be read.
Frequently asked questions
Is crypto self-custody legal for advisers as of October 2, 2026?
No. The Commission proposed a conditional self-custody path. The existing custody rule remains in force until a final rule is adopted and effective.
What is the release number?
Investment Advisers Act Release No. 7023, Adviser and Regulated Fund Custody Rules; Crypto Custody Rules, dated October 1, 2026.
Can a state trust company custody crypto for a fund today under this proposal?
Only if it already fits the current rule. The proposal would add state-chartered trust companies as permitted crypto custodians, subject to conditions, if the proposal is adopted.
Does this apply to operating companies that merely hold bitcoin on their own balance sheet?
The proposal amends custody rules for investment advisers and regulated funds. An operating company that is not an adviser and does not run a regulated fund is not the direct target. Its adviser, if it has one, may be.
Where is the comment deadline?
It will be stated when the proposal is published in the Federal Register. Do not calculate it from October 1 alone.
Son GΓΌncelleme / Last Updated: October 2, 2026.
Related reading: Stablecoin rules under the GENIUS Act and MiCA Β· Crypto tax reporting: CARF, DAC8, Form 1099-DA. Department hub: Law.
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