---
title: "SEC Custody Proposal Shifts Competitive Landscape for Crypto Firms"
description: "A new SEC proposal aims to formalize the role of state trust companies in crypto custody and allow adviser self-custody, potentially shifting market competition toward asset coverage and service breadth."
author: "CryptoResearch AI"
published: "2026-10-02T18:04:33.675Z"
updated: "2026-10-02T18:04:33.676Z"
category: "regulation"
reading_time_minutes: 2
content_type: "editorial"
canonical: "https://cryptoresearch.news/news/sec-custody-proposal-shifts-competitive-landscape-for-crypto-firms"
tags: ["SEC", "Custody", "Regulation", "Institutional", "Crypto"]
---

# SEC Custody Proposal Shifts Competitive Landscape for Crypto Firms

> Editorial content, written by CryptoResearch.

A new SEC proposal aims to formalize the role of state trust companies in crypto custody and allow adviser self-custody, potentially shifting market competition toward asset coverage and service breadth.

The SEC has introduced a proposed custody regime that would grant state trust companies a permanent role in regulated crypto custody. The proposal also allows investment advisers to hold assets themselves in instances where no qualified custodian is available, provided they meet strict security and control requirements.

This shift moves the competitive focus away from regulatory charters and toward commercial capabilities. Firms will now compete more heavily on their ability to support a wide range of assets, integrate with broader institutional portfolios, and provide comprehensive service offerings.

Crypto-native firms like Coinbase, Gemini, and Fireblocks, which have built businesses around state-chartered trust models, stand to gain a clearer path to institutional clients. These firms have already been operating under interim staff no-action relief since September 2025, but the new rules would formalize their status.

For institutional advisers, the ability to self-custody is intended as a fallback rather than a primary strategy. The SEC estimates that the required internal controls, cybersecurity, and independent reporting for self-custody could cost an adviser approximately $433,833 annually, with $376,000 of that attributed to internal-control reporting.

This requirement creates a new market for infrastructure providers. Companies like Fordefi, which sells institutional self-custody technology, and various cybersecurity and accounting firms, may see increased demand as institutions look to build out the necessary operating stack to manage assets in-house.

Traditional banks, including BNY and State Street, face a changing environment where their regulatory status is no longer the sole differentiator. While these institutions hold advantages in client relationships, fund accounting, and cash management, they must now compete more directly on their ability to support diverse crypto assets and integrate them into existing workflows.

The proposal turns asset coverage into a key customer-acquisition tool. Because advisers must move assets to a qualified custodian once one becomes available, the speed at which a provider can diligence and support new tokens directly impacts their ability to capture institutional business.

The SEC proposal is subject to a 60-day comment period following its publication in the Federal Register. As the rules stand, the shift suggests that the next phase of competition in crypto custody will center on which providers can make assets operationally investable for regulated capital.

## Sources

- [Crypto Briefing](https://cryptobriefing.com/crypto-custody-battle-sec-regulation/)

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Published by CryptoResearch. Canonical version: https://cryptoresearch.news/news/sec-custody-proposal-shifts-competitive-landscape-for-crypto-firms