SEC Reg Crypto Proposal Starts 60-Day Federal Register Comment Clock

The Securities and Exchange Commission on October 1, 2026 proposed new rules and amendments to create a tailored custody framework for crypto assets held by registered investment advisers and regulated funds, according to the SEC's own release. The proposal, issued under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, would modernize custody rules, permit self-custody under certain circumstances, and allow state trust companies to serve as custodians. SEC Chairman Paul S. Atkins said the proposal replaces 'the grey of uncertainty' with a clear compliance pathway. The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register. Separately, the Federal Reserve Board extended the comment period on its Regulation O proposal to November 4.

Background

The SEC's release frames the proposal as a response to the growth of crypto assets since Bitcoin's introduction in 2008, describing the market as having grown 'from a niche curiosity into a multi-trillion-dollar asset class.' According to the SEC, existing custody rules were 'crafted for a bygone era' and have not kept pace with industry practices, leaving advisers and funds without a compliant pathway to custody crypto assets. The proposal would update requirements relating to financial statement audits for registered investment advisers and broker-dealer custodial services for regulated funds, which include registered investment companies and business development companies. It would also permit crypto assets to be held in self-custody under certain circumstances and allow the use of state trust companies as custodians for client and regulated fund crypto assets. The SEC release states that the proposal would modernize custody rules and expand investor choice by removing regulatory barriers that inhibit advisers' ability to provide crypto-related investment advice, and would allow regulated funds to offer clients access to a wider range of crypto asset-related investment strategies. The Federal Reserve Board's separate release concerns a different rulemaking: its proposal to modernize Regulation O, which governs extensions of credit by a bank to its insiders, including bank executives, board members and major shareholders who could potentially influence a bank's lending decisions.

What happened

The SEC's release, dated October 1, 2026, states that the Commission proposed new rules and amendments to provide a tailored framework for the custody of crypto assets for registered investment advisers and regulated funds, defined as registered investment companies and business development companies. The proposal would modernize custody rules and expand investor choice by removing regulatory barriers that inhibit an adviser's ability to provide crypto-related investment advice, and would allow regulated funds to offer clients access to a wider range of crypto asset-related investment strategies. The release states that the proposed rules and amendments under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 would better address current industry practices and update requirements relating to, among other things, financial statement audits for registered investment advisers and broker-dealer custodial services for regulated funds. It would also permit crypto assets to be held in self-custody under certain circumstances and allow the use of state trust companies as custodians for client and regulated fund crypto assets. SEC Chairman Paul S. Atkins said in a statement that since Bitcoin's advent in 2008 the crypto asset market has grown into a multi-trillion-dollar asset class and that the proposal would provide a clear regulatory framework for custody, giving advisers and funds a compliant pathway where none existed before. The release states that the public comment period will remain open for 60 days following publication of the SEC's proposing release in the Federal Register. Separately, the Federal Reserve Board announced Friday, August 21, 2026, that it will extend until November 4 the comment period on its proposal to modernize Regulation O, with comments originally due by October 5; the Board said the extension allows interested parties more time to analyze the issues and prepare comments.

Market impact

The sources contain no price, flow, trading volume or asset-under-management figures for crypto assets or for investment advisers and funds. The only quantitative references are temporal and procedural: the SEC's public comment period will remain open for 60 days following publication of its proposing release in the Federal Register; the SEC release is dated October 1, 2026; and the Federal Reserve Board's Regulation O comment period is extended until November 4, from an original deadline of October 5. The SEC release also refers to the crypto asset market as a 'multi-trillion-dollar asset class' without specifying a figure, and notes Bitcoin's introduction in 2008. No market reaction, fund flows, or valuation changes are described in either source. Accordingly, DeFi Intel cannot report any market-impact figures from these documents; the measurable effects described are limited to the length and timing of the comment windows and the scope of the proposed rule changes.

Why it matters

According to the SEC's release, the proposal would create a clear regulatory framework for crypto asset custody, giving investment advisers and funds a compliant pathway where none existed before. The release states that the proposal would modernize custody rules and expand investor choice by removing regulatory barriers that inhibit advisers' ability to provide crypto-related investment advice, and would allow regulated funds to offer clients access to a wider range of crypto asset-related investment strategies. It would also permit crypto assets to be held in self-custody under certain circumstances and allow state trust companies to serve as custodians for client and regulated fund crypto assets. The release states that the proposed rules would update requirements relating to financial statement audits for registered investment advisers and broker-dealer custodial services for regulated funds. The 60-day comment period following Federal Register publication gives the public a defined window to respond. The Federal Reserve Board's separate action extends the Regulation O comment period to November 4 to allow interested parties more time to analyze the issues and prepare their comments, according to the Board's release.