It seems that the SEC is planning to provide a legal way for licensed investment advisors and regulated funds to manage encrypted assets. The main beneficiaries are institutions. However, after the institutional pipeline is opened, there is also an opportunity to bring more customers willing to allocate encrypted assets. Some institutions help clients manage large amounts of money, but they dare not allocate this money to cryptocurrency assets because the custody cannot comply with regulations. The current proposal from the SEC is to legally custody encrypted assets. However, it is still a proposal at present. Specifically, Previously, encrypted asset custody cards were subject to custody rules under the Investment Advisory Act, while the fund side was also subject to the 1940 Investment Company Act. US investment advisors primarily rely on the Custody Rule (Rule 206 (4) -2) under the Investment Advisory Act to manage client assets. However, this set of rules applies to stocks/bonds/cash (requiring assets to be placed with "qualified custodians" such as banks/securities firms). Cryptocurrency assets are a new type of asset that does not correspond to this set of rules, resulting in unclear compliance for investment advisors and funds. As a result, some institutional allocations cannot enter or can only bypass gray areas. Spot currencies such as Bitcoin and Ethereum ETFs have already found qualified custodians, and a portion of institutional funds have already come in. The path that this proposal aims to open up mainly includes: 1. Allow "self hosting" under specific circumstances. After new assets are released, qualified custodians often have to wait several months before supporting them. The proposal acknowledges the reality that investment advisors or funds can manage their clients' or funds' encrypted assets on their own after determining that there are no available licensed custodians. However, there are guardrails - there must be storage capacity/network security/annual review/internal reports/statements/disclosure to customers; And it is necessary to first assess and then conduct quarterly reviews to confirm that there are indeed no qualified custodians available to take over. Self custody is still subject to fiduciary obligations and is not about casually holding the private key. The 'self' here refers to investment advisors or fund custodians, not customers who take their own private keys. 2. State chartered trust companies can act as crypto custodians. Not only federal banks are eligible. Before and every year thereafter, the investment advisor or fund must have reasonable grounds to believe that the state's banking regulatory agency has authorized it to act as a crypto custodian, and that it has a written system to prevent theft/loss/misappropriation. Many state trust companies that are already engaged in institutional encrypted custody will have an additional clear channel as a result. 3. Modernize the old custody rules with ease. This includes auditing the financial statements of investment advisors, the conditions for using securities firms for fund custody, and removing "authorized discretionary trading" from triggering custody rules under the premise of meeting restrictions (execution can only be transferred to designated client accounts and cannot be transferred to accounts controlled by investment advisors or their affiliates). In addition, if the investment advisory only constitutes custody due to a standing letter of authorization, it may be exempt from the requirement of independent verification.