SEC proposes modernized crypto custody rules, acknowledging regulatory lag
SEC Chairman Paul Atkins acknowledged that federal securities rules have not kept pace with Bitcoin's growth and announced a new custody proposal to modernize how advisers and funds handle crypto assets.
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What happened
SEC Chairman Paul Atkins stated that federal securities rules have lagged Bitcoin's development since 2008. The SEC has proposed new rules to modernize custody standards for crypto assets held by advisers and funds.
Why it matters
Regulatory clarity on custody reduces operational and legal risk for institutional crypto adoption. Formalized custody rules lower barriers for traditional asset managers and funds to offer crypto products, potentially expanding the addressable market for digital assets within regulated frameworks.
Market transmission
First-order: reduced compliance uncertainty for crypto-focused advisers and fund managers, lower custody-related operational costs. Second-order: increased institutional inflows into crypto products, potential expansion of crypto ETF/fund offerings, improved market structure and counterparty risk management.
What to watch
Final rule publication timeline and scope (which asset classes, which custodians qualify); adoption rates by registered investment advisers; subsequent SEC guidance on related areas (trading, settlement); market reaction in crypto-linked ETFs and fund flows.
Source:BeInCrypto
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