The U.S. Securities and Exchange Commission (SEC), the U.S. securities regulator, has proposed allowing investment advisers to hold covered client crypto assets when an eligible custodian is unavailable, subject to safeguards. Its economic analysis models an annual cost of $433,833 per adviser, including an independent internal control report and recurring compliance work but excluding potentially significant technology, software, hardware and related systems costs. The estimate could make the fallback easier for larger advisers to offer, while smaller firms may decide against it or pass costs to clients. The proposal, approved on Oct. 1, would require advisers to establish through due inquiry that no qualified custodian can maintain each asset, revisit that conclusion at least quarterly and transfer assets to an eligible custodian as soon as reasonably practicable once one becomes available. Adviser self-custody (an intermediary holding client key materials) would involve controls such as asset-specific expertise, cybersecurity protections, dual authorization, segregation of client assets, annual independent reviews, network reconciliation and quarterly client reporting. The SEC’s analysis assumes about 823 advisers, or 5% of 16,442 registered advisers, would use the option, while cautioning that actual uptake could be lower. The ultimate benefit for investors would depend on implementation costs, accountant pricing and which crypto assets eligible custodians support.