What do the SEC's proposed crypto custody rules mean for investment companies and advisers holding XRP?

The full answer

What did the SEC propose on October 1, 2026?

The SEC headlined the release “SEC Proposes Rules on Crypto Custody by Investment Companies and Advisers.” It proposed new rules and amendments on how regulated investment companies may custody crypto securities and similar investments, and how registered investment advisers may custody client crypto funds and securities, along with changes to related reporting and recordkeeping requirements [1].

The rules are proposals, not final, and the SEC’s announcement speaks of crypto assets in general.

What would the proposal allow?

The SEC’s fact sheet says the proposal sits under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. It would permit advisers and regulated funds to self-custody crypto assets in certain circumstances and subject to conditions. It would also permit them to keep client or fund crypto assets with a state trust company, subject to conditions. The SEC adds that it would modernize the custody rules and update recordkeeping and disclosure requirements [2].

Crypto Economy reported on October 1, 2026 that the SEC submitted a proposed rule on how investment firms must custody their clients’ crypto assets, which it described as filling a regulatory gap the industry had been carrying for years [3].

Does this reach XRP holdings?

The SEC’s announcement speaks of crypto securities, similar investments and crypto assets. Its fact sheet and announcement do not name XRP [1][2]. The rules would matter to XRP only where an adviser or regulated fund holds XRP and XRP falls within the assets the final rules cover. Whether XRP is a security is a separate question, covered on Is XRP a security?.

Five spot XRP ETFs were trading on U.S. exchanges as of the January 24, 2026 report by The Crypto Basic, offered by Grayscale, Franklin, Bitwise, Canary, and 21Shares. If a product sits outside the Investment Company Act, the proposed fund custody provisions may bear on it differently from how they bear on a registered fund. That is my reading, not an SEC statement.

How does this differ from the bank custody picture?

The proposal addresses advisers and regulated funds under securities law. Banks follow separate rules, covered on Can US banks now hold and custody crypto like XRP?. Lending against XRP and bank capital treatment are covered on What rules govern lending against XRP, and how do bank capital rules treat it?. Legal commentary frames the underlying question as how crypto assets and service providers fit the custody requirements of three federal laws: the Advisers Act, the Investment Company Act and the Securities Investor Protection Act [4].

What is still unsettled?

The SEC has proposed these rules, not adopted them. As of October 7, 2026, whether and when they are adopted, and in what form, is not yet known. Broader US rulemaking on crypto remains in motion, and the XRP regulatory risk page tracks what remains open after the lawsuit. A proposal that makes custody easier does not by itself show that firms will hold more XRP. The evidence on that is weighed on Is future adoption already priced into XRP?.