Tag: Regulation & Policy

The U.S. Securities and Exchange Commission (SEC) has proposed new rules that could significantly alter the landscape of cryptocurrency custody for investment advisors and state trust companies. Unveiled on Thursday, the proposal aims to address the long-standing challenge of finding qualified custodians for digital assets, potentially allowing investment advisors to self-custody client crypto assets under specific conditions and permitting state trust companies to serve as custodians.

According to the SEC, this move is a response to market realities and a step toward providing greater clarity in the evolving digital asset space. SEC Chairman Paul Atkins stated that the crypto asset market has grown substantially, and existing regulations have not kept pace. The proposal, according to the SEC, seeks to balance easing access to digital assets with maintaining necessary safeguards for investors.

Key to the proposal is the allowance for investment advisors to self-custody client crypto assets if they cannot find a qualified custodian. However, this option comes with strict conditions. Advisors must first suggest that no qualified custodian is available and must re-evaluate this quarterly. If a qualified custodian becomes available, the assets must be transferred promptly. Furthermore, self-custody requires robust private key protection mechanisms, comprehensive cybersecurity measures, and the isolation of each client’s assets. Any transfer of self-custodied crypto assets would necessitate approval from at least two authorized personnel.

Additionally, the proposal would permit state trust companies to act as cryptocurrency custodians. To do so, these companies must obtain state authorization for crypto custody, establish procedures to prevent asset loss or theft, provide audited financial statements and internal control reports, and ensure client assets are segregated from their own.

This initiative follows legislative efforts, such as the CLARITY Act, which have stalled in the Senate. The SEC appears to be pursuing regulatory changes through administrative rulemaking. This shift to administrative action is viewed by some in the industry, such as Bitwise, as potentially leading to faster regulatory developments without the limitations of broader legislative frameworks.

SEC Commissioner Hester Peirce noted the challenges financial advisors have faced due to regulatory uncertainty in custody. The SEC’s proposal attempts to bridge this ‘custody gap,’ shifting the issue from a regulatory hurdle to a market-based challenge.

However, the proposal is not without uncertainties. The strict conditions for self-custody may suggest costly or burdensome, potentially limiting its practical application to larger institutions. It remains to be seen how many investment advisors will opt for self-custody and how many state trust companies will invest in the necessary infrastructure and compliance. The SEC has opened the proposal for a 60-day public comment period, during which industry participants and the public can provide feedback. The final impact will depend on the SEC’s subsequent enforcement standards and the market’s reaction.

SEC Commissioner Mark Uyeda acknowledged potential conflicts of interest in advisor self-custody but emphasized that advisors’ fiduciary duties to clients remain fully applicable. The proposal also includes provisions for regulated funds to entrust their crypto assets to investment advisors under specific conditions, provided the fund’s board oversees the arrangement.

This development occurs alongside other regulatory actions. In recent weeks, the SEC has issued guidance on crypto assets, and the Commodity Futures Trading Commission (CFTC) has submitted its own crypto market regulation proposal to the White House. The SEC’s proposal to relax custody rules is a significant signal for the institutionalization of crypto assets, though its ultimate effectiveness will hinge on market adoption and the clarity of future SEC enforcement.

Why This Matters

The materials describe a narrow update: The SEC proposed to relax rules regarding cryptocurrency custody, allowing investment advisors to self-custody client crypto assets when qualified custodians are unavailable and permitting state trust companies to act as custodians. The extent to which investment advisors will be willing to self-custody assets given the strict conditions.

Broader Context

Source materials place the factual news in this context: SEC 鬆綁加密託管規則！顧問可自保管，州信託公司也能進場.

SEC Proposes Easing Crypto Custody Rules for Investment Advisers

The U.S. Securities and Exchange Commission (SEC) has put forth a proposal aimed at simplifying the rules surrounding how investment advisers and funds hold cryptocurrency, potentially removing a significant regulatory obstacle that has hindered some firms from offering digital asset investments to their clients.

The proposal, unveiled on Thursday, would permit investment advisers to hold clients’ crypto assets directly, under specific conditions, when no eligible third-party custodian is available. It would also broaden the scope of entities that can act as crypto custodians to include state-chartered trust companies.

“The crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure. Unfortunately, our rules and regulations have not kept pace,” stated SEC Chair Paul Atkins in a release.

The initiative addresses a practical challenge in crypto investing: investment advisers often struggle to find qualified custodians for specific digital tokens, thereby limiting the investment options they can present to clients. The Chamber of Digital Commerce has previously voiced concerns regarding the scarcity of qualified crypto custodians. In a May 2025 submission to the SEC, the organization noted that some advisers had either rejected token allocations or requested portfolio companies to hold them until custody solutions became available.

SEC Commissioner Hester Peirce described the prevailing uncertainty as a regulatory “roller coaster,” remarking that advisers have been “gritting their teeth and holding on for dear life” while awaiting workable custody regulations.

Under the SEC’s proposed framework, advisers wishing to self-custody client crypto would be required to demonstrate that no approved custodian exists for each specific asset and to re-evaluate this determination on a quarterly basis. Should a custodian become available, the assets would need to be transferred promptly.

Self-custody would also necessitate robust safeguards for private keys, cybersecurity measures, and the clear segregation of each client’s holdings. Any transfer of self-custodied crypto assets would require approval from at least two authorized individuals.

SEC Commissioner Mark Uyeda acknowledged that adviser custody presents “an inherent conflict of interest,” emphasizing that advisers’ fiduciary duties would remain in effect when they hold clients’ crypto assets.

The proposal also suggests allowing regulated funds to maintain crypto assets in self-custody with their investment adviser, provided the adviser adheres to self-custody requirements and the fund’s board of directors oversees the arrangement.

The use of state-chartered trust companies—financial institutions authorized by a U.S. state to manage assets on behalf of others—would be subject to distinct conditions. These include ensuring the trust company is authorized by the relevant state authority for crypto custody, possesses adequate procedures to protect crypto assets from loss, theft, or misappropriation, and provides audited financial statements and internal control reports. Client holdings must also be kept separate from the company’s own assets.

The package further proposes modifications to audit, recordkeeping, and disclosure requirements. The SEC will accept public comments on the proposal for 60 days following its publication in the Federal Register.

This latest proposal is part of a broader effort by the SEC and the Commodity Futures Trading Commission (CFTC) to establish clearer regulatory frameworks for crypto assets within their existing authorities, particularly after the CLARITY Act did not advance in the Senate last month. The CFTC has submitted its own crypto market proposal for White House review, while the SEC has recently opened avenues for trading tokenized stocks.

New York and Wyoming have established a framework for cross-state cryptocurrency supervision through a Memorandum of Understanding (MOU) signed on Thursday. The agreement aims to streamline regulatory processes and enhance collaboration between the New York State Department of Financial Services (NYDFS) and the Wyoming Division of Banking, potentially reducing administrative burdens for crypto businesses operating in both states.

The core of the MOU focuses on creating a coordinated approach to overseeing cryptocurrency companies. This includes mechanisms for sharing information related to license reviews, coordinating examinations, and collaborating on enforcement actions, according to the MOU.

A key provision introduces an accelerated review process for established, compliant companies. Businesses licensed in one of the two states for three or more years with no enforcement actions may be eligible for expedited review in the other state. As per the Wyoming Division of Banking and NYDFS, the second state regulator commits to making a decision on such applications within six months.

This initiative addresses the ongoing challenge of a fragmented regulatory landscape for digital assets in the U.S. New York has operated under its BitLicense system since 2015, while Wyoming established its charter system for digital assets, including Special Purpose Depository Institutions (SPDIs), starting in 2018.

As stated by NYDFS, the collaboration is intended to improve regulatory efficiency and reduce compliance costs for businesses. It also aims to strengthen cross-state enforcement capabilities. This development could potentially set a precedent for other states looking to coordinate their approaches to cryptocurrency regulation.

However, uncertainties remain regarding the broader impact of such interstate cooperation. It is yet to be seen whether these state-led alliances can effectively fill the regulatory vacuum or if they represent a transitional phase before potential federal legislation is enacted. Federal-level cryptocurrency legislation has seen stalled progress.

The agreement was signed on Thursday. New York introduced the BitLicense system in 2015, and Wyoming established its digital asset charter system in 2018. In 2023, NYDFS Chairman Michael Brown testified before Congress about the BitLicense system’s role in consumer protection.

This regulatory cooperation may signal a move towards a more unified, albeit state-led, approach to crypto regulation in the U.S. The potential for similar collaborations between other states could lead to a ‘regional alliance’ model. Nevertheless, the ultimate effectiveness of interstate cooperation in addressing the complexities of cryptocurrency regulation, and its role as a long-term solution, remains to be determined.

Why This Matters

The materials describe a narrow update: NYDFS and the Wyoming Division of Banking have established a cross-state cryptocurrency regulatory coordination mechanism through an MOU. Whether interstate cooperation can fill the regulatory vacuum.

Broader Context

Source materials place the factual news in this context: US House of Representatives began a legislative marathon on crypto on the 14th, covering stablecoins, regulatory boundaries, and anti-CBDC.

The Securities and Exchange Commission (SEC) on Wednesday proposed a new framework aimed at clarifying how registered investment advisers and regulated funds can custody crypto assets. This initiative seeks to replace years of regulatory ambiguity with a clear compliance path, potentially easing barriers for institutional investors interested in digital assets.

Addressing Regulatory Uncertainty
The proposal tackles a significant challenge for investment professionals: determining which crypto arrangements satisfy the “qualified custodian” requirements under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. It has long been unclear which crypto arrangements meet these strict safekeeping standards, causing many firms to hesitate in offering digital-asset strategies.

Key Provisions and Goals
Key aspects of the proposed framework include allowing for self-custody under specific conditions, permitting state trust companies to serve as custodians for crypto assets, and updating rules for financial-statement audits for advisers and broker-dealer custodial services for funds. The SEC stated that the overarching goal is to widen investor access to crypto strategies by removing obstacles that have kept advisers on the sidelines.

Context and Next Steps
SEC Chairman Paul Atkins noted that the agency’s existing rules “have not kept pace” with the evolving crypto asset market, which has grown substantially since Bitcoin’s advent in 2008. The proposed rules are intended to replace “the grey of uncertainty created by custody rules crafted for a bygone era,” according to agency statements. This regulatory effort is part of a broader build-out by the SEC, particularly as legislative efforts like the Clarity Act have stalled.

It is crucial to note that this proposal is not final. A 60-day public comment period will begin once the proposal is published in the Federal Register. During this time, the agency will gather feedback and may revise the rules before any vote to adopt them.

This proposal follows other recent SEC actions in the crypto space, including an “innovation exemption” for tokenized stocks and the proposed Regulation Crypto Assets framework for crypto fundraising. SEC staff have also offered clarifications, such as stating that token buybacks do not inherently classify a crypto asset as a security.

The SEC’s move signals an increasing focus on providing regulatory clarity for the digital asset market, potentially encouraging greater institutional participation by addressing key compliance concerns. However, the specific conditions for self-custody and the requirements for state trust companies are not yet detailed, and the final rules remain subject to change following the public comment period.

Why This Matters

The materials describe a narrow update: The SEC proposed a framework to govern how registered investment advisers and regulated funds can custody crypto assets, aiming to provide a clear compliance path and replace regulatory ambiguity. The proposal is not final and can be revised before adoption.

Broader Context

Source materials place the factual news in this context: The crypto asset market has grown from a niche curiosity into a multi-trillion-dollar asset class to which investors actively seek exposure.

The US Senate’s recent failure to advance the CLARITY Act has introduced a period of regulatory ambiguity for the cryptocurrency market, coinciding with a notable rally in several digital assets. While the bill’s stall avoids potential new restrictions on stablecoins and exchange operations, it leaves the long-term regulatory landscape uncertain.

The CLARITY Act, after years of negotiation, did not secure the necessary 60 votes in the US Senate. This outcome has been viewed by some in the industry as a positive development. According to Hougan, Chief Investment Officer at Bitwise, the failure was beneficial because the final version of the bill contained compromises that could have imposed new restrictions on stablecoins, exchange operations, and licensing. With the bill stalled, existing stablecoin rules remain in place, and established exchanges such as Coinbase and Kraken avoid potential changes to their operational frameworks for now.

Following the vote, several digital assets experienced price increases. Bitcoin and Ethereum each rose approximately 11%. More significant gains were seen in other cryptocurrencies, with NEAR jumping 125%, Uniswap rising 49%, and Avalanche gaining 44%. The proposed legislation would have restricted platforms from paying customers interest or rewards on stablecoin balances and would have created a national licensing system for spot crypto exchanges, potentially limiting how exchanges combine trading and brokerage services.

In parallel with the legislative developments, the Securities and Exchange Commission (SEC) has recently provided clearer guidance in certain areas. The SEC has allowed certain tokenized US stocks to trade through blockchain-based systems under temporary rules. According to Hougan, these temporary rules could offer tokenization companies an opportunity to test their technology in real markets sooner. Additionally, the SEC has clarified that announcing a buyback program does not, by itself, turn a token into a security once a blockchain network is functional. Hougan interprets this clarification as beneficial for revenue-generating tokens, citing examples like NEAR and Uniswap, which have seen gains while utilizing protocol revenue for buybacks.

Despite the immediate positive market reaction and the SEC’s recent clarifications, significant regulatory uncertainty persists. Hougan expects that “crypto to be too big to crush,” but acknowledges that future regulatory changes remain a possibility. Michael Saylor also sees the current situation as an opportunity. He recently argued that the crypto sector may be better served by working with supportive regulators at agencies like the SEC, CFTC, and Treasury, rather than accepting restrictive legislation. Saylor believes the industry should use the coming years to build compliant crypto products under existing rules, focusing on lowering costs, expanding access, and giving users more control over their money, rather than rushing to pass compromise legislation.

However, the long-term regulatory outlook carries inherent risks. A major uncertainty remains regarding potential regulatory shifts under a new administration. Future leadership at the SEC or CFTC could adopt a more stringent approach to cryptocurrency regulation. This evolving landscape underscores the need for the industry to navigate carefully, balancing innovation with compliance in the face of ongoing regulatory ambiguity.

Why This Matters

The materials describe a narrow update: The US CLARITY Act failed to pass the Senate. Future regulatory changes under a new administration.

Broader Context

Source materials place the factual news in this context: The CLARITY Act failed to get the 60 votes needed to move forward in the US Senate after years of negotiations.

Latvijas Banka, Latvia’s central bank, has issued a dual crypto license to Noah LV SIA, a subsidiary of the UK-based Noah HQ Ltd. This authorization, granted under the European Union’s Markets in Crypto-Assets (MiCA) framework, allows Noah LV SIA to operate as both a crypto-asset service provider and a payment institution, granting it passporting rights across the European Union (EU) and the European Economic Area (EEA).

The license, officially granted on September 30, 2026, enables Noah LV SIA to leverage its Latvian base to access the broader European market. Established in July 2026, the company’s move signifies a strategic positioning within the EU regulatory perimeter.

MiCA Framework and Passporting Rights

The EU’s MiCA framework establishes a harmonized regulatory environment for crypto assets. A MiCA license, such as the one issued to Noah LV SIA, grants authorized firms the ability to offer services in any EU or EEA country without requiring separate authorizations in each jurisdiction. This passporting mechanism is crucial for companies seeking to scale their operations across the bloc.

Latvia’s Strategic Role

Latvia’s active role in issuing these licenses aligns with a broader strategy to position the country as a fintech and crypto-friendly jurisdiction within the EU. The issuance of licenses to entities like Noah LV SIA, which has roots outside the EU, highlights Latvia’s function as a gateway for non-EU firms aiming to access the European market.

As of October 1, 2026, Latvijas Banka had issued a total of 12 MiCA licenses. This active issuance rate underscores Latvia’s commitment to facilitating compliant crypto operations and contributing to the EU’s objective of a regulated digital asset market.

Trend of Non-EU Firms Seeking EU Entry

Among the entities that have received MiCA-related authorizations in Latvia, BlockBen SIA was granted the first MiCA license in December 2025. More recently, on June 25, 2026, Bleap SIA received an approval with a narrower scope. The trend of UK firms, such as Noah LV SIA and Bleap SIA, seeking EU market access through Latvian authorizations suggests a pattern of companies establishing a base within the bloc to serve European customers under the new regulatory regime.

Why This Matters

The materials describe a narrow update: Latvijas Banka issued a license to Noah LV SIA, a subsidiary of UK-based Noah HQ Ltd, allowing it to operate as both a crypto-asset service provider and a payment institution under the EU’s MiCA regulations. Latvia’s approach fits a broader strategy of positioning the country as a fintech and crypto-friendly jurisdiction.

Broader Context

Source materials place the factual news in this context: The authorisation comes under the EU’s Markets in Crypto-Assets framework, better known as MiCA. It is the bloc’s rulebook for crypto businesses that want to operate legally across member states.