{"id":1663,"date":"2025-09-18T08:01:29","date_gmt":"2025-09-18T08:01:29","guid":{"rendered":"https:\/\/iqeq.com\/us\/insights\/crypto-regulation-is-changing-in-the-u-s-what-alternative-investment-managers-need-to-know\/"},"modified":"2025-10-03T14:15:00","modified_gmt":"2025-10-03T14:15:00","slug":"crypto-regulation-is-changing-in-the-u-s-what-alternative-investment-managers-need-to-know","status":"publish","type":"post","link":"https:\/\/iqeq.com\/us\/insights\/crypto-regulation-is-changing-in-the-u-s-what-alternative-investment-managers-need-to-know\/","title":{"rendered":"Crypto regulation is changing in the U.S.: What alternative investment managers need to know\u00a0"},"content":{"rendered":"
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By Lindsay Burckett-St Laurent, Senior Managing Director, Client Delivery, U.S. and Dan Miller, Senior Managing Director, Client Delivery, U.S.<\/em><\/p>\n

For years, cryptocurrency has sat just outside the mainstream of institutional finance. Regulatory ambiguity, capital burdens and restrictive custody rules kept most institutions and alternative investment managers at arm\u2019s length.<\/span>\u00a0<\/span><\/p>\n

But that picture is changing rapidly. Under the current administration, U.S. regulators and lawmakers have moved at speed to define new \u201crules of the road\u201d for digital assets. These changes are opening the door for banks, broker-dealers and investment advisers to participate in crypto markets in a compliant way.<\/span>\u00a0<\/span><\/p>\n

The opportunity set is expanding, but so are regulators\u2019 expectations. For managers, now is the time to review governance, risk and disclosure frameworks to ensure readiness for a more <\/span>crypto-inclusive environment<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

The U.S. regulatory landscape: Recent developments<\/span>\u00a0<\/span><\/h2>\n

OCC Interpretive Letter 1184<\/span>\u00a0<\/span><\/h3>\n

The <\/span>Office of the Comptroller of the Currency confirmed<\/span><\/a> that national banks can now provide crypto custody services in both fiduciary and non-fiduciary capacities. They can use sub-custodians, facilitate crypto-to-fiat settlements, and even support products such as loans using crypto as collateral.<\/span>\u00a0<\/span><\/p>\n

Impact for managers:<\/span><\/b> With banks like JPMorgan <\/span>exploring crypto-backed loans<\/span><\/a>, institutional-grade crypto solutions are becoming more accessible. But any counterparty you rely on will need to maintain robust cyber, risk management and vendor oversight frameworks \u2013 and you will, too.<\/span>\u00a0<\/span><\/p>\n

Repeal of SEC\u2019s SAB 121<\/span>\u00a0<\/span><\/h3>\n

SAB 121<\/span><\/a> had required custodians to carry their clients\u2019 crypto assets on their own balance sheets, which was a costly deterrent for banks and trust companies. Its repeal removes that burden.<\/span>\u00a0<\/span><\/p>\n

Impact for managers:<\/span><\/b> More custodians are likely to enter the market, giving advisers more choice. This may also accelerate the development of regulated financing solutions tied to digital assets.<\/span>\u00a0<\/span><\/p>\n

Withdrawal of 2019 broker-dealer custody guidance<\/span>\u00a0<\/span><\/h3>\n

The SEC and FINRA have formally <\/span>withdrawn prior guidance<\/span><\/a> that limited broker-dealers\u2019 ability to custody digital assets. Broker-dealers can now custody non-security tokens like Bitcoin. In certain cases, self-custody is permitted.<\/span>\u00a0<\/span><\/p>\n

Impact for managers:<\/span><\/b> Broker-dealer custody now looks more like traditional frameworks, broadening the field of \u201cqualified custodians.\u201d But <\/span>due diligence<\/span><\/a> is critical: managers must confirm counterparties are properly registered and capable of safeguarding assets.<\/span>\u00a0<\/span><\/p>\n

GENIUS Act (stablecoin framework)<\/span>\u00a0<\/span><\/h3>\n

The <\/span>GENIUS Act<\/span><\/a>, signed in July 2025, establishes the first federal framework for payment stablecoins. It requires 100% reserve backing, monthly public disclosures, consumer redemption rights, and priority claims in insolvency. Only banks, credit unions and OCC-licensed non-banks may issue stablecoins; foreign issuers must meet comparability standards.<\/span>\u00a0<\/span><\/p>\n

Impact for managers:<\/span><\/b> Stablecoins are gaining legitimacy<\/span><\/a> as a payment instrument, but issuers will face ongoing audits and reporting obligations, and the firms using them will need to confirm issuer status and update disclosures accordingly. The reciprocity provisions also raise cross-border considerations for funds with international affiliates.<\/span>\u00a0<\/span><\/p>\n

CLARITY Act (digital asset oversight): pending Senate approval<\/span>\u00a0<\/span><\/h3>\n

The <\/span>CLARITY Act<\/span><\/a> aims to settle a long-running jurisdictional debate between the SEC and the CFTC: who will oversee securities-like tokens, and who will regulate \u201cdigital commodities\u201d? The bill provides for dual registration pathways and criteria for when an asset transitions from security to commodity status.<\/span>\u00a0<\/span><\/p>\n

Impact for managers:<\/span><\/b> SEC-registered advisers may also need to register with the CFTC, depending on their holdings. Offering documents, Form ADV\/BD filings, custody practices and marketing disclosures will need to reflect these classifications once finalized.<\/span>\u00a0<\/span><\/p>\n

Anti-CBDC Surveillance State Act: pending Senate approval<\/span>\u00a0<\/span><\/h3>\n

This bill would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) or offering direct-to-consumer Fed accounts, reflecting concerns about privacy and surveillance.<\/span>\u00a0<\/span><\/p>\n

Impact for managers:<\/span><\/b> This act would remove the near-term risk of mandatory CBDC integration into U.S. payment systems. Firms should review contracts, vendor agreements, and marketing materials to ensure they aren\u2019t reliant on a U.S. CBDC assumption.<\/span>\u00a0<\/span><\/p>\n

Impact on investment advisers and broker-dealers<\/span>\u00a0<\/span><\/h2>\n

For U.S.-regulated advisers and broker-dealers, these regulatory changes aren\u2019t abstract policy; they\u2019re practical shifts in how firms can access, hold and report on digital assets. The most immediate impacts include:<\/span>\u00a0<\/span><\/p>\n