Melanie Waddell at ThinkAdvisor wrote about the SEC's plan to release a revamped custody rule in October, and asked what advisers should be watching. My view is that this is the item on the agenda most likely to change how advisers operate day to day, because a custody rule touches operations, not just disclosure.
Crypto is the real driver here. Advisers have been asking for a clean answer on this for years. The current rules were written for accounts holding stocks and bonds at a bank or broker-dealer, and they do not map cleanly onto how crypto exchanges and custodians actually hold assets today. What the SEC should provide is a clear, workable definition of qualified custodian that accounts for that reality. Industry lawyers expect the eventual rule to be more accommodating for advisers who want to hold crypto for clients, but accommodating and clear are not the same thing.
My caution was about speed. Rushing an October rulemaking to hit a deadline would be a mistake. Getting the definition right matters more than getting it fast, because firms will build procedures, vendor contracts and client agreements around whatever the rule says.
For clients, the practical question is simple: do you know how your accounts are custodied today, and how that would change under a new framework? Ask before October.
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