SEC Proposes New Crypto Custody Rule: How Asset Segregation Reshapes Exchanges

SEC floats a new crypto custody rule, easing the leash on advisers

On October 1, 2026, the US Securities and Exchange Commission (SEC) released a package of proposed rules on crypto asset custody, modernizing the custody regime tied to the Investment Advisers Act. The headline shift: under strict conditions, investment advisers and funds would be allowed to self-custody client crypto assets — as long as client assets are segregated from the firm's own, a qualified custodian is involved, and periodic audits and disclosures are in place. It marks a noticeable softening from an earlier, stricter draft.

How it unfolded

The proposal carries the identifier RIN 3235-AN46 and entered White House OIRA review on August 25 before surfacing publicly on October 1. That same day, SEC Commissioner Mark T. Uyeda issued a statement on the revision.

The problem it targets is concrete. For several years, crypto-native firms that wanted to hold client assets compliantly had to fit rules built for traditional custodians, with little room to adapt — heavy friction, high cost. The new draft tries to rebalance investor protection against a workable path for the industry. Its three guardrails — segregation, a qualified custodian, and recurring audits and disclosure — are what keep the self-custody relief bounded rather than open-ended.

The backstory

The SEC has swung between tightening and easing its stance on crypto custody for years. The earlier proposal drew industry pushback for being too strict and proved hard to implement. Through 2026 the agency has visibly sped up its framework-building: in August it floated Regulation Crypto Assets, among other measures, and this custody revision is one more piece of the same puzzle — arguably the infrastructure piece, since custody rules decide whether advisers and funds can actually hold crypto for clients at all.

What it means

If the proposal becomes final, advisers and funds gain a second option: instead of leaning only on a traditional third-party custodian, they could self-custody under set conditions, potentially trimming compliance costs. For platforms built around institutional business, that's a clear tailwind — custody capability and regulatory standing become more valuable.

For everyday investors the near-term effect is indirect. Over the medium term, smoother institutional rails mean wider pipes for capital entering the market. On compliance and custody, it's worth checking Coinbase and Kraken, both of which moved early on institutional custody.

Cold water: this is a proposal, not a rule. It still has to clear public comment and a final vote, its language can change along the way, and the timing is uncertain. Relief is not deregulation — segregation, audits, and disclosure are hard requirements, and if they are enforced poorly, the risk lands back on investors.

For public disclosures on trading and custody platforms, start with Binance, OKX, and Gate.

Risk note

This is a news summary of a regulatory development, not investment advice. Crypto prices swing hard, and compliant custody does not mean assets can't lose value. The proposal is still in process, so its terms and timing remain uncertain. Details are current as of October 2026 — confirm them against official SEC announcements.

Risk disclosure and affiliate notice: Crypto trading and custody carry risk and can result in lost principal. Nothing here is investment advice. This article contains affiliate links; registering through them may earn us a commission at no extra cost to you, and it does not affect our conclusions. Regulatory information and mechanics are current as of October 2026 — always check official announcements.