# SEC Chair Paul Atkins Directs Staff to Draft Crypto Self-Custody Rules for Investment Advisers

Source: TechNewsList (https://technewslist.com)
Canonical URL: https://technewslist.com/en/article/sec-chair-paul-atkins-crypto-self-custody-framework-2026-09-16-morning
Section: DeFi & Crypto (https://technewslist.com/en/defi-crypto)
Author: TechNewsList
Language: en
Published: 2026-09-16T05:20:21.209+00:00
Updated: 2026-09-16T05:20:21.359903+00:00

> SEC Chairman Paul Atkins has directed agency staff to draft rules allowing registered investment advisers to self-custody crypto assets and utilize state-chartered trust companies, marking a landmark shift in federal digital asset regulation.

## TL;DR
- SEC Chair Paul Atkins directed staff to draft rules allowing investment advisers to self-custody crypto assets.
- The initiative clarifies qualified custodian status for state-chartered trust companies, resolving third-party shortages.
- The policy pivot is a flagship component of the SEC's new Project Crypto regulatory modernization framework.
- Proposed rulemaking is slated for Commission review and public comment before the conclusion of 2026.

## Key points
- SEC Chairman Paul Atkins instructed the Division of Investment Management to draft crypto self-custody rules for RIAs.
- The proposal will recognize state-chartered trust companies as qualified custodians under the Investment Advisers Act.
- Self-custody frameworks will require FIPS-certified hardware security modules, multi-party computation, and proof-of-reserves.
- The move eliminates major structural hurdles preventing institutional capital from interacting directly with DeFi protocols.
- The initiative forms a core pillar of Project Crypto, aimed at establishing clear rules for tokenized digital infrastructure.
- Formal notice of proposed rulemaking is anticipated for full Commission vote and public comment before year-end 2026.

## What happened

On September 15, 2026, Securities and Exchange Commission Chairman Paul Atkins formally instructed agency staff to draft comprehensive regulatory amendments permitting registered investment advisers (RIAs) to self-custody crypto assets on behalf of clients. Delivering keynote remarks at the Solana Policy Institute Summit in Washington, Atkins announced that the Commission is actively preparing a formal notice of proposed rulemaking to overhaul legacy custodial restrictions. The directive represents one of the most substantial regulatory realignments in modern federal securities oversight, reversing years of enforcement-centric digital asset policies.

Under the forthcoming regulatory proposal, registered asset managers will be granted clear legal pathways to manage digital assets directly without being required to deposit private keys exclusively with traditional national banks. Chairman Atkins specifically directed staff to explore qualified custodian eligibility for state-chartered trust companies, resolving a long-standing jurisdictional impasse that left numerous specialized crypto custodians in regulatory limbo. The initiative constitutes the first major policy release under the SEC's newly instituted "Project Crypto," an agency-wide initiative intended to establish clear supervisory standards for decentralized finance, institutional trading, and tokenized financial market infrastructure.

## Why it matters

For more than a decade, the SEC's strict interpretation of Rule 206(4)-2 under the Investment Advisers Act of 1940—commonly known as the Custody Rule—effectively barred institutional asset managers from directly interacting with decentralized finance protocols. Regulated advisers were mandated to maintain client funds and securities with qualified custodians, defined almost exclusively as federally regulated banks, savings associations, and registered broker-dealers. However, federal banking regulators historically discouraged major national depository institutions from holding digital assets, creating an acute structural bottleneck that prevented trillions of dollars in institutional wealth from engaging with on-chain protocols.

By authorizing institutional self-custody and formally recognizing state-chartered trust institutions, the SEC is removing the single largest structural barrier preventing mainstream institutional capital deployment in digital assets. Registered investment advisers manage more than $120 trillion in global assets, yet their ability to execute staking strategies, participate in on-chain governance, or custody emerging native tokens has been constrained by the scarcity of compliant third-party custodial partners. Atkins' directive acknowledges the reality that cryptographic self-custody, when fortified by institutional governance controls and multi-party computation, can deliver equivalent or superior security compared to legacy paper-based custodial arrangements.

## Technical details


![Panel presentation detailing state trust charters, institutional wallet infrastructure, and investment adviser fiduciary duties](https://rkhynbcsbnkkcwgexzwg.supabase.co/storage/v1/object/public/media/api/1789536011579-8dvfqm-sec-chair-paul-atkins-crypto-self-custody-framework-2026-09-16-morning-inside-1-af47204f39.webp)


The forthcoming SEC rule proposal focuses on establishing rigorous technological and operational benchmarks for institutional self-custody environments. Rather than mandating third-party institutional escrow, the framework will establish verifiable standards for private key lifecycle management. Registered advisers seeking self-custody safe harbors must implement multi-party computation (MPC) architectures, hardware security modules (HSMs) certified to FIPS 140-3 Level 3 standards, and strict multi-signature governance workflows that eliminate single points of operational failure. Furthermore, firms will be required to maintain cryptographic proof-of-reserve telemetry verified through independent, automated continuous auditing mechanisms.

Crucially, the regulatory blueprint addresses the unique technical properties of decentralized networks where physical possession is mathematically redefined through cryptographic signature thresholds. The proposal instructs staff to draft clear guidance regarding client asset segregation across public blockchain ledgers, prohibiting the commingling of advisory client tokens with firm operational balances or proprietary trading positions. For state-chartered trust companies, the framework will clarify capital adequacy reserves, cybersecurity underwriting standards, and cold-storage offline redundancy requirements, ensuring that state-level oversight aligns with federal investor protection mandates without imposing unworkable depository banking mandates.

## Market / industry impact


![In-depth regulatory analysis comparing proposed SEC self-custody exemptions with existing 1940 Investment Advisers Act rules](https://rkhynbcsbnkkcwgexzwg.supabase.co/storage/v1/object/public/media/api/1789536014159-lvakcr-sec-chair-paul-atkins-crypto-self-custody-framework-2026-09-16-morning-inside-2-9106686a20.webp)


The market reaction across institutional digital finance was immediate and overwhelmingly positive. Shares of publicly traded cryptocurrency infrastructure providers, decentralized asset management protocols, and enterprise custody technology vendors surged following the announcement. Institutional custodians including Anchorage Digital, BitGo, and Coinbase Custody welcomed the move to legitimize state trust charters, noting that clear federal recognition will unlock corporate treasury management, sovereign wealth allocations, and institutional endowment mandates that previously remained sidelined due to regulatory ambiguity.

The policy shift also fundamentally levels the playing field for boutique registered investment advisers and crypto-native hedge funds. Under previous SEC guidance, smaller asset managers faced prohibitive compliance and third-party custodial onboarding fees that frequently exceeded hundreds of thousands of dollars annually, entrenching market concentration among a handful of dominant custodial conglomerates. By establishing standardized self-custody criteria, the SEC will enable innovative asset management firms to deploy on-chain algorithmic strategies and direct staking operations with significantly reduced operational overhead, catalyzing capital formation across the broader web3 innovation ecosystem.

## What to watch next

Following Chairman Atkins' directive, SEC staff within the Division of Investment Management will formulate the formal notice of proposed rulemaking, which agency officials expect to present for a full Commission vote before the end of 2026. Once approved, the proposed rules will undergo a mandatory 60-day public notice and comment period, during which institutional asset managers, cybersecurity auditing firms, and financial consumer protection advocates will submit detailed technical feedback regarding key custody thresholds.

Concurrently, market observers will monitor parallel legislative and inter-agency developments in Washington. The SEC's proactive stance is expected to accelerate coordination with the Commodity Futures Trading Commission (CFTC) and the Office of the Comptroller of the Currency (OCC), harmonizing prudential banking guidelines with securities custody standards. Additionally, the digital asset industry will closely track subsequent regulatory milestones under Project Crypto, including anticipated agency guidance on blockchain transfer agent registrations and decentralized autonomous organization (DAO) governance participation.

## Sources

- [SEC Official Speeches & Statements](https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-solana-policy-institute-summit-2026) — Official address by SEC Chairman Paul Atkins detailing the staff mandate for adviser crypto self-custody and state trust eligibility.
- [CoinDesk Policy & Regulation](https://www.coindesk.com/policy/2026/09/15/sec-chair-paul-atkins-directs-staff-to-allow-crypto-self-custody-for-advisers/) — Analysis of the SEC's Project Crypto agenda, examining legal implications for registered investment advisers and custody rule modernizations.
- [Cointelegraph Institutional Crypto](https://cointelegraph.com/news/sec-chair-paul-atkins-instructs-staff-draft-crypto-self-custody-rules-investment-advisers) — Legal commentary on how expanding custody definitions to state trust companies addresses third-party custodial shortages.

Mentions: Securities and Exchange Commission, Paul Atkins, Solana Policy Institute, Investment Advisers Act of 1940

## Sources
- [SEC Official Speeches & Statements](https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-solana-policy-institute-summit-2026)
- [CoinDesk Policy & Regulation](https://www.coindesk.com/policy/2026/09/15/sec-chair-paul-atkins-directs-staff-to-allow-crypto-self-custody-for-advisers/)
- [Cointelegraph Institutional Crypto](https://cointelegraph.com/news/sec-chair-paul-atkins-instructs-staff-draft-crypto-self-custody-rules-investment-advisers)