The SEC is considering crypto recommendations for its custody rule

The Securities and Exchange Commission is considering new recommendations on crypto for investment advisers and investment companies, according to recent remarks.

William Birdthistle, Director of the Division of Investment Management, addressed the emergence of crypto in an address to the IAA Investment Adviser Compliance Conference. The division of investment management oversees rulemaking related to investment advisers. During his remarks, Birdthistle said he is considering ways to "bring order" to the crypto industry. 

"For investment advisers, I am cognizant of questions about how providing advice regarding crypto assets impacts compliance with the Act, particularly aspects of the custody rule," he said.

The custody rule, also known as the Advisers Act, requires advisers to hold a client's securities with a designated qualified custodian. Qualified custodians are essentially banks, broker-dealers and trusts licensed on the federal or state levels. Some crypto firms have already nabbed the designation, like Coinbase's custody service and Anchorage Digital Bank.

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But in the past, it's been unclear how the SEC views the designation on a state level. The SEC asked for public comments on qualified custodians as they relate to digital assets in the wake of Wyoming's decision to grant a no action letter to Two Ocean, a wealth management firm facilitating crypto investing that positioned itself public