The Bitcoin Beacon
A rewrite of how investment advisers may hold bitcoin would bless multisig and split-key setups — and route around a Congress that can’t pass a crypto law.
WASHINGTON — The Securities and Exchange Commission has sent the White House a rewrite of one of the least glamorous but most consequential rules in crypto: who is allowed to hold a client’s bitcoin, and how. The proposal went to the Office of Management and Budget for review, filed as a deregulatory action under Executive Order 14192, which pushes agencies to cut rules rather than add them.
The revision updates custody requirements for registered investment advisers and investment companies — the funds and managers who steward other people’s money. Today’s custody rule was written for stocks and cash and fits bitcoin awkwardly, effectively herding advisers toward a narrow set of qualified custodians. The new framework would explicitly permit multi-signature and multi-party-computation wallet architectures, which split a private key across several independent parties so no single one can move the coins — and no single failure loses them.
Self-custody’s hardest problem for institutions was never ideology; it was operational risk. One key is one point of failure, one catastrophic mistake. Multisig and multi-party computation remove that single point by design, which is exactly why careful bitcoiners have used them for years. Blessing them for regulated advisers narrows the distance between how a diligent individual holds bitcoin and how a fund is permitted to.
For a decade the friction on institutional bitcoin was that the rulebook didn’t know what a private key was. This is the rulebook learning.
The move sidesteps the legislature. The CLARITY Act, the market-structure bill meant to set the rules of the road for digital assets, has stalled. Rather than wait, the SEC is doing what it can by regulation — an administrative path that reaches parts of the problem a bill would, without a floor vote.
A rule made this way can be unmade by the next administration as easily. OMB review and a comment period mean nothing is final. Consumer advocates will warn that loosening custody standards for a volatile bearer asset invites the very failures the old rule guarded against. And “permits multisig” is not “requires self-custody”: most institutional bitcoin will still sit with large custodians. The direction, though, is the story. The rails that decide whether a fund can hold bitcoin the way a careful person does are being redrawn.
Why it matters: the rules that decide how funds may hold bitcoin are being rewritten by regulators — because lawmakers won’t.
The proposal is at OMB for review under Executive Order 14192 and is not final; details on multi-signature and multi-party-computation custody are per the reporting above. Informational only — not financial advice.
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