On September 30 the UK Financial Conduct Authority opened its application window for crypto firms. On October 1 the US Securities and Exchange Commission proposed rules for how investment advisers and funds can hold crypto assets. The two announcements cover different markets, but both turn on the same question: who holds the asset, and under what rules.
What the SEC proposed on October 1
The SEC’s press release 2026-100 describes new rules and amendments that set up “a tailored framework for the custody of crypto assets” for registered investment advisers and regulated funds. Regulated funds here means registered investment companies and business development companies.
The SEC says the proposal would remove regulatory barriers that inhibit an adviser’s ability to provide crypto-related investment advice. It would also let regulated funds offer clients access to a wider range of crypto asset-related investment strategies. The release ties both changes to its custody rules.
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The proposal changes several existing requirements. It updates rules on financial statement audits for registered investment advisers and on broker-dealer custodial services for regulated funds. It would also permit crypto assets to be held in self-custody under certain circumstances, and it would allow state trust companies to act as custodians for client and regulated fund crypto assets.
SEC Chairman Paul S. Atkins framed the aim in a statement quoted in the release. The proposal would provide, in his words, “a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before”. He added that it would replace “the grey of uncertainty created by custody rules crafted for a bygone era.”
The comment period stays open for 60 days after the proposing release is published in the Federal Register. Until a final rule exists, nothing in the proposal changes what an adviser may do today.
What the FCA opened on September 30
The FCA’s announcement says crypto firms can now apply for authorisation. Firms that intend to keep operating in the UK should apply by 28 February 2027. The new regime comes into force on 25 October 2027, so the window closes about eight months before the rules start.
The FCA states that authorisation is not automatic. Firms must show they meet standards on consumer protection, safeguarding of customer assets, market integrity and financial resilience, and firms that cannot will not be authorised. Existing firms that apply within the window can keep providing cryptoasset services, including taking on new business, while the FCA assesses their application, if no decision has been made before the regime starts.
The FCA says it expects to determine applications submitted during the window before the new regime comes into force. A firm that applies late has less time for that assessment, and the FCA advises firms to apply as early as possible within the window to extend the period they can keep operating while it is decided.
Dominic Cashman, director of authorisation at the FCA, said: “The UK’s new crypto regime will give consumers greater protections and firms a clear framework to operate in. Firms can now apply for authorisation and start preparing for regulation.”
Safeguarding gets the most detail in the FCA’s separate overview of its cryptoasset policy statements. The regulator says the Cryptoassets Regulations, passed by Parliament on 4 February 2026, brought a broad range of cryptoasset activities inside its perimeter for the first time. The earlier perimeter covered anti-money laundering and financial promotions.
On custody, the FCA is applying its client asset rules in chapter 17 of the Client Assets sourcebook (CASS 17) to client cryptoassets. It reports strong stakeholder support for protections around ownership rights, record-keeping, reconciliation and private key management. It adopted a technology-agnostic approach to private key management and raised the share of assets that may be held to support a settlement float to 2%. It also introduced targeted exceptions to the trust requirements.
The statement also records what is not settled. The FCA is not applying CASS 17 to custody of relevant specified investment cryptoassets at this stage. It plans further engagement on tokenised asset custody, and it says it will consult later this year on how to manage the failure of a cryptoasset firm, including distribution rules that would apply if a stablecoin issuer or a cryptoasset custodian fails.
The stablecoin side: reserves are a custody problem too
Stablecoin rules in both countries lean on the same idea. On the UK side, the FCA’s stablecoin policy confirms statutory trust arrangements for backing assets and removes unallocated backing fund accounts. It allows limited intragroup custody subject to safeguards, and it permits up to a 5% excess in the backing asset pool. It also cut the coefficient in its stablecoin issuance capital formula from 2% to 1%.
In the US, the Federal Reserve Board requested comment on September 24 on two proposals under the GENIUS Act for payment stablecoin issuers it supervises. The first would require issuers to fully back their stablecoins with permissible reserve assets, such as short-term Treasury bills and certain other high-quality liquid assets. It would add standardized capital requirements and risk management standards. It would also introduce rules for Board-supervised firms that safekeep the assets backing payment stablecoins. The second sets a tailored application process for Board-supervised banks that want to issue payment stablecoins.
We covered the Fed proposals when they came out, in our piece on stablecoin regulation filling in agency by agency. The new detail is the safekeeping rule. A reserve that is fully backed on paper still depends on whoever holds the Treasury bills, and the Fed proposal writes rules for that holder.
The derivatives side: tokenized collateral and recordkeeping
The Commodity Futures Trading Commission added a third thread on September 24. Staff in its Market Participants Division, Division of Market Oversight and Division of Clearing and Risk updated their crypto and blockchain FAQs to address two topics: investments of customer funds in tokenized forms of permitted investments, and the use of blockchain technologies to satisfy a registrant’s recordkeeping requirements. The FAQs first appeared on March 20, 2026, and build on staff letters on tokenized collateral and on digital assets accepted as margin.
CFTC Chairman Michael S. Selig said: “I’m pleased to see staff update these frequently asked questions consistent with the agency’s ongoing efforts to provide regulatory clarity for the crypto industry.” Our earlier brief on the FAQ expansion has the first reaction. The FAQs are staff guidance, not a rule.
Where the four announcements line up
This section is our analysis, not the regulators’ framing.
Taken together, the four releases cover advisers and funds (SEC), authorised crypto firms (FCA), stablecoin issuers (Fed) and futures market participants (CFTC). The product differs in each. The questions the rules reach for overlap: who holds the asset, how the holding is recorded, and what safeguards apply to the holder.
Three details show the overlap.
First, record-keeping. The FCA names reconciliation and record-keeping among its safeguarding protections, and the CFTC FAQs address blockchain records as a way to meet a registrant’s recordkeeping duty. Both put the record of a holding at the center of compliance.
Second, who is allowed to hold. The SEC proposal would permit state trust companies as custodians and would allow self-custody in some circumstances. The Fed proposal writes rules for firms that safekeep reserve assets. The FCA applies client asset rules to custodians. Each regulator is setting out who may hold assets and under what duties.
Third, failure. The FCA says it will consult on distribution rules for a failed stablecoin issuer or custodian. The US press releases we reviewed do not mention that question. We have not read the full proposal texts, so this piece makes no claim about what they say on insolvency.
The timing differs sharply. The UK has final rules and a dated application window, with the regime starting on 25 October 2027. The US pieces named here are proposals or staff guidance with comment periods still open. A firm planning for both markets has a date to work to in London and a draft to comment on in Washington.
What it means for the finance leader
A treasury or finance team that holds, or plans to hold, crypto assets or stablecoin balances should expect its custodian to be asked new questions over the next year. We would put four of them to the custodian now.
- Where is the asset recorded, and who reconciles it? The FCA’s list of record-keeping and reconciliation protections is a reasonable checklist even for firms outside the UK.
- What is the custodian’s legal form? The SEC proposal contemplates state trust companies. The legal form decides what a customer can claim if the custodian fails.
- Who controls the private keys? The FCA chose a technology-agnostic approach to key management, so the answer is a disclosure item, not a mandated design.
- What backs a stablecoin balance, and who holds the backing? The Fed proposal lists short-term Treasury bills and certain high-quality liquid assets as permissible reserves and proposes rules for safekeeping them.
Firms with UK operations have a calendar item: apply by 28 February 2027 to keep trading under the transitional arrangement. Firms with US exposure can read the SEC and Fed proposals while the comment periods run and send comments to the agencies. Comment letters from users of custody services are one way the final text gets shaped.
What stays open
Four gaps remain in the public record. The FCA has not applied its client asset rules to custody of relevant specified investment cryptoassets, and it has more work planned on tokenised asset custody. The FCA’s failure-resolution consultation has not been published. The SEC’s 60-day comment clock starts only once the proposal appears in the Federal Register. The CFTC’s FAQs are staff views, and the release does not say whether they will become rules.
The next step for readers is concrete: pull the SEC proposal and the Fed’s two Federal Register notices, search each for the word “custodian”, and list every duty the text puts on that party. That list is the draft of the diligence questions above.
Source: SEC
