Policy Friday: October 1 – October 12, 2026

Proposed SEC rules would add conditional adviser custody and eligible state trust companies as crypto custody options.

Advisers and regulated funds may lack permitted custodians with the capability to safeguard particular crypto assets. Peirce's October 1 statement describes a proposal allowing adviser custody when no permitted custodian is available, with initial and quarterly availability determinations, and state trust company custody subject to initial and annual diligence. Potentially, these options could support covered Ethereum-based investment products where custody availability is a constraint. The rules are proposed, and the stated scope covers specified funds, securities, or similar investments rather than every crypto asset.

The SEC's custody proposal would broaden crypto custody options while requiring safeguards for adviser or fund custody.

Advisers and funds seeking crypto exposure can encounter unavailable or unwilling custodians. Uyeda's October 1 statement describes proposed adviser or fund custody when no qualified custodian is available, subject to expertise, cybersecurity, annual reviews, internal reporting, statements, and disclosures. Potentially, firms developing Ethereum-based investment services could gain custody flexibility while needing additional operational controls. These are proposed arrangements, and the statement does not establish final rules or asset-specific eligibility.

FinCEN withdraws proposed unhosted-wallet compliance requirements for banks and money service businesses.

As of October 6, FinCEN withdrew its 2020 proposal and states it will take no further action on that NPRM. Banks and money service businesses handling Ethereum-based transfers can remove this proposal from their pending-rule implementation plans, potentially reducing anticipated compliance development work. The withdrawn requirements concerned unhosted wallets and wallets hosted in identified jurisdictions. This withdraws a proposal, rather than repealing an operative rule or establishing broader permission for wallet transactions.

FinCEN withdraws its international virtual-currency mixing finding and proposed special reporting measure.

Effective October 6, FinCEN withdrew both its section 311 finding on international virtual-currency mixing and the associated proposed enhanced recordkeeping and reporting measure. Financial institutions assessing Ethereum transactions with mixing exposure can revise plans for this specific proposed compliance layer, potentially reducing anticipated reporting development work. The notice does not establish blanket permission for mixing or resolve other compliance requirements.

The SEC proposes conditional self-custody and state trust company custody options for advisers and regulated funds holding crypto assets.

On October 1, the SEC proposed a tailored crypto custody framework for registered advisers and regulated funds. If adopted, conditional self-custody and state trust company eligibility could expand custody choices for institutions considering Ethereum-related investment strategies. Advisers, funds and custodians should assess the potential consequences for custody design, audits and service arrangements. The framework remains proposed, with a 60-day comment period after Federal Register publication; the release does not establish detailed conditions or Ethereum-specific treatment.