SEC Chair Atkins Outlines Proposed Custody Framework Opening Legal Path for Funds to Hold Crypto

Securities and Exchange Commission (SEC) Chairman Paul Atkins announced that forthcoming custody regulations will establish a definitive legal framework for registered investment advisers (RIAs) and institutional funds to custody digital assets compliant with federal securities laws.
The policy shift signals a marked transition toward regulatory clarity and formal institutional participation across digital asset markets:
• Institutional On-Ramp & Fiduciary Clarity: Under previous enforcement-led interpretations, RIA mandates under the Advisers Act Custody Rule faced severe ambiguity regarding qualified custodians for digital assets. The proposed framework establishes standardized safeguarding standards, removing a critical legal barrier for wealth managers, pensions, and mutual funds seeking direct balance-sheet allocations.
• Broadening Regulatory Agenda: Atkins indicated that the custody framework represents the initial component of a broader multi-part regulatory overhaul aimed at codifying asset classification, exchange registration parameters, and secondary-market trading guidelines.
• Market Structure Implications: Expanding the scope of federally compliant qualified custodians lowers institutional capital hurdles, positioning tier-1 banks, regulated trust companies, and crypto-native custodians to absorb institutional liquidity inflows while reducing counterparty legal risk across spot digital asset markets.