New SEC crypto rules threaten small advisers, but big firms win
The SEC’s proposed crypto custody fallback would let investment advisers hold covered client assets when no eligible custodian is available, provided they meet safeguards including expertise, cybersecurity, segregation, annual independent control reports and client disclosures. The SEC estimates annual costs of about $434,000 per adviser, mainly for an independent report, excluding potentially substantial technology expenses. These costs may deter smaller firms, while larger advisers or firms with reusable infrastructure could spread them across more clients and assets. Advisers must move assets to a qualified custodian once one becomes available. The proposal could expand access to some crypto assets, but the extent of that benefit will depend on implementation costs, accountant availability and which assets eligible custodians support.
