The U.S. Securities and Exchange Commission has unveiled a proposed revision to cryptocurrency custody rules for investment advisers and regulated funds.

CoinPost, a blockchain media outlet, reported on Oct. 2 that the proposal would allow crypto self-custody under certain conditions and allow trust companies established under state law to serve as custodians for client assets and fund assets.

The proposal focuses on revising crypto custody standards for registered investment advisers and regulated funds such as unit investment trusts and business development companies. With many existing custody rules drafted before the spread of the internet, the SEC said it will shift them to a system suited to today’s market structure. The proposal is part of rules and amendments under the Investment Advisers Act of 1940 and the Investment Company Act of 1940.

The key aim is to lower regulatory barriers that investment advisers have faced when providing crypto-related advice. Regulated funds would be able to offer clients a broader range of crypto-related investment strategies. The SEC plans to accept public comments for 60 days after a notice of adoption is published in the Federal Register.

SEC Chairman Paul Atkins said that since Bitcoin emerged in 2008, cryptocurrencies have grown beyond a niche market into a multi-trillion-dollar asset class in which investors actively seek opportunities. He added that existing asset custody rules have not kept up with these market changes, and said the proposal presents custody options that meet legal requirements for investment advisers and funds.

The SEC continued crypto-related measures using its existing authority even after the U.S. Senate, on Sept. 15, rejected a motion to end debate to proceed to a vote on the Clarity bill, by 49 votes in favor to 50 against. On Sept. 17, it introduced a temporary regulatory exemption for some tokenised securities trading infrastructure and liquidity providers.

The Division of Corporation Finance, or OFCO, also published cryptocurrency-related frequently asked questions on Sept. 25 and 28 reflecting staff views. The document said, regarding whether crypto assets qualify as securities, that token redemptions in operating systems and routine updates do not constitute investment contracts. It contains content that could significantly affect issuers’ practical judgments. While these measures are not formal rulemaking, they have the character of interpretive guidance that could affect market practice.

As legislation is delayed, the SEC is broadening the scope of its overhaul within its current authority by combining exemptions, staff interpretations and proposed rules. Future focus is expected to center on how specifically the public comment process defines the scope of self-custody and conditions for using trust companies, and what changes follow for actual product design by investment advisers and regulated funds.