SEC Proposes Crypto Custody Framework as GENIUS Act Deadlines Approach
Registered advisers, funds and BDCs would gain conditional self-custody and state trust company options under a 760-page SEC proposal, while Treasury's stablecoin certification procedures took effect early.
On Oct. 1 the SEC proposed a 760-page framework under the Advisers Act and Investment Company Act letting registered advisers and registered funds, including BDCs, self-custody crypto assets if a permitted custodian is unavailable, and maintain assets with state trust companies subject to diligence on the trust company's authority, policies, audited financials and internal controls. The proposal would add custody disclosure to Form ADV and Form N-CEN, with comments due 60 days after Federal Register publication. Peirce, who left the Commission on Oct. 2 and left it with two sitting members, criticized the drafting of "self-custody."
Treasury's Stablecoin Certification Review Committee separately published an interim final rule, effective on publication, setting forms and procedures for state certifications under GENIUS Act Section 4(c) for issuers with $10 billion or less in outstanding payment stablecoins; certifications will not be accepted until the information collection clears Paperwork Reduction Act approval. The statute applies from Jan. 18, 2027. Counsel should watch comment letters, PRA clearance, custody-rule scope changes, and the CFTC's pending event-contract and casino-style gambling rules, now at OIRA.