U.S. Securities and Exchange Commission Chair Paul Atkins announced that the agency intends to introduce additional crypto regulatory proposals. This follows the SEC’s October 1 proposal detailing how regulated funds and investment advisers may hold crypto assets, which represents part of a wider initiative to modernize federal securities rules for digital assets.
Atkins Signals Further Crypto Regulatory Proposals
Atkins said that the SEC will keep building its cryptocurrency framework following the custody requirements. “Our work is not finished. More regulatory proposals are on the horizon,” he stated, though he did not provide a release date or specify what the upcoming proposals will cover.
The SEC chair connected the custody proposal to previous agency initiatives concerning token offerings, blockchain trading, and tokenized securities. He characterized these steps as components of a comprehensive regulatory strategy, with additional measures scheduled under the commission’s existing powers.
According to Atkins, legacy custody regulations were primarily designed for traditional financial assets, with many provisions predating the internet era even as demand for crypto investments has expanded. He contended that funds and advisers require more explicit guidelines for managing digital assets on behalf of clients.
He also highlighted bottlenecks in current custody services. While existing regulations mandate that firms use approved custodians, these providers can require months to extend support to newly created digital assets. Atkins noted that the proposed framework aims to close this gap while preserving safeguards against asset loss, theft, and misuse.
Crypto Custody Proposal Allows Conditional Self-Custody
The SEC unveiled its custody proposal on October 1, targeting registered investment companies, registered investment advisers, and business development companies. These modifications would function pursuant to the Investment Company Act of 1940 and the Investment Advisers Act of 1940.
The plan would allow regulated funds and advisers to self-custody crypto assets under specific conditions. Additionally, the proposal would allow state trust companies to act as custodians for fund and client crypto holdings, provided certain criteria are met.
In addition to crypto, the package modernizes current custody standards by addressing broker-dealer custody services for regulated funds and financial statement audits for investment advisers. The SEC stated that these updates reflect current industry feedback and operational practices.
Because these custody updates are still proposals, the SEC will collect public feedback for 60 days following the publication of the proposing release in the Federal Register. The commission must formally adopt final rules before companies can utilize the proposed custody allowances.
Tokenized Stock Trading Adds to SEC’s Crypto Agenda
The custody framework builds on the SEC’s September 17 Innovation Exemption tailored for select tokenized stock trading. Atkins explained that this temporary measure grants conditional relief to qualifying liquidity providers and trading venues, though standard federal prohibitions against market manipulation and fraud remain fully active.
Participating platforms are required to limit access to qualified participants and adhere to U.S. sanctions regulations. Qualifying tokenized shares must maintain standard shareholder protections, such as voting privileges and dividends, and issuers must retain the ability to block their securities from trading on these platforms.
Additionally, the SEC introduced Regulation Crypto Assets in August. This framework features a startup offering exemption allowing up to USD 5 million over a four-year span, alongside a fundraising exemption permitting up to USD 75 million each year. Both programs remain active elements of the agency’s ongoing crypto regulatory agenda.
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