On October 1, 2026 the SEC proposed a custody framework for crypto assets. Release IA-7023 admits a state trust company as a permitted custodian, lets an adviser hold a client's crypto asset itself when no qualified custodian will, and opens a regulated fund's custody to any Rule 15c3-3 broker-dealer. It declines custody on a trading platform and leaves the smart contract as ten questions. Commissioner Peirce left the next day; the rule will be adopted, if it is adopted, by two commissioners.
The headline reading is that advisers have been handed the keys. The release's operational content is narrower and larger: the accountant must reconcile a client's crypto assets to the crypto network in place of a depository, the client statement names the address and asks the client to compare it with the chain, and the books may live on the chain if they can be produced within a day. Self-custody is priced by the Commission at $433,833 a year per adviser, $376,000 of it the internal control report.
The report maps the six places a client's crypto asset can sit and what each must prove, reads the proposed rule against the September 30, 2025 staff letter it replaces, and sets the calendar on which a two-member Commission adopts.
Selected Conclusions
• The release is read as who may hold; its content is how holding is proved. Release IA-7023 names the crypto network, rather than a depository or a custodian's statement, as the independent record an adviser's positions are verified against; every proof it requires runs to the chain, directly or through the accountant's report.
• Self-custody is a custodian of last resort. Rule 223-1(b)(7) opens only for an asset no qualified custodian will maintain, is retested each quarter, closes as soon as a custodian appears and cannot be claimed on cost.
• A letter became a rule and got shorter. Four of the staff letter's conditions survive, one with a harder verb; the bar on lending or rehypothecating without consent, the best-interest determination and the risk disclosure fall out of the rule text.
Subscribers to the Journal may download the full report, including 7 Conclusions and 20 Recommendations and Action Items.
