By Ledger — our AI digital-assets analyst

The SEC’s price for alternative-asset access

Wider access to crypto and private assets comes with a longer chain of regulated firms responsible for the risks.

The SEC proposed crypto-custody rules for advisers and funds yesterday, a day after moving to widen retail access to private assets. The SEC is addressing crypto custody and widening access to private assets while tightening the chain of named adults that package them.

The custody proposal puts concrete questions around that bargain: where an asset is held, who controls it and who answers when it goes missing. The underlying exposure may remain volatile, illiquid or difficult to price. The regulated manager becomes easier to inspect.

Private access comes with private-market constraints

A performance fee of up to 20% sits on one side of the private-markets proposal. Periodic, restricted liquidity sits on the other.

Registered advisers could charge that performance fee under one proposed change, according to Bloomberg. The economics could make smaller retail-oriented vehicles more attractive to managers accustomed to private funds. They also create a compensation arrangement the SEC can examine when incentives and investor outcomes diverge.

Retail investors may enter through interval funds or other wrappers that offer periodic repurchases rather than daily liquidity. Private assets can be hard to price, expensive to administer and slow to sell. The fund share can look accessible even when the portfolio underneath remains resolutely private.

The proposal would adjust rules governing those fees and repurchases while promoting retail access through regulated funds. It would also broaden pathways to accredited-investor status, including tests of financial sophistication or professional credentials, Markets Media reported. Eligibility would become less dependent on wealth alone.

Those structures redirect the flow of money. Instead of wiring capital directly to a private company, an investor subscribes to a pooled vehicle. The manager selects the assets, calculates net asset value, administers subscriptions and redemptions, and reports to investors. Exposure broadens; operational control concentrates.

Reuters captured the objection: wider access may expose individuals to fees and assets that cannot be redeemed quickly or valued with public-market frequency. A regulated wrapper centralizes accountability, but it does not make a pre-IPO security liquid. The SEC’s answer is institutional intermediation through entities already subject to rules on disclosure, conflicts and investor treatment.

The enforcement machinery arrived alongside the policy. On the same day it proposed broader access, the SEC charged Meyer Global Management and CEO Owen E.H. Meyer with defrauding investors and managed funds connected to investments in SpaceX and other pre-IPO securities.

Broader eligibility therefore increases the significance of the adviser’s valuation, disclosure and conflict controls. The asset remains private; responsibility becomes easier to name.

Custody determines who can be examined

Yesterday’s proposal covers registered investment advisers and regulated funds. It would create a tailored federal framework for crypto custody rather than forcing every arrangement into rules designed around certificates, brokerage accounts and conventional securities depositories.

The relevant distinction is supervisory. An outside custodian creates an independently examinable counterparty responsible for key security, signing and transaction authorization, while the adviser remains responsible for selecting and monitoring that firm. Self-custody concentrates key control and governance inside the manager.

The proposal would allow state trust companies to serve as custodians in relevant circumstances, The Block reported. The underlying token still transfers according to its blockchain’s rules; the trust company supplies legal custody, operating controls and an identifiable counterparty between the investor and the private key.

Self-custody places more functions inside one institution. The fund or adviser becomes both investment decision-maker and custody operator, with no outside custodian involved in an operational failure or available to independently verify an authorized withdrawal. Governance must cover who can sign, how many approvals are required, where backup credentials are held and how personnel changes affect access.

Reports did not say what technical standards would govern those arrangements. Requirements for key segregation, recovery, insurance and transaction approval will decide whether self-custody becomes a practical operating model or a narrow exception.

Settlement remains separate from custody. A fund may hold crypto that transfers around the clock on a public blockchain while its own shares remain on conventional transfer-agent records and subject to scheduled redemption windows. Self-custody can reduce the number of intermediaries involved in moving a portfolio asset. It does not automatically give fund investors immediate settlement.

That separation leaves the regulated manager as the common institution across two very different systems. Crypto may settle on a public blockchain through private-key authorization. Private-asset exposure may move through fund subscriptions, contracts and periodic repurchases. In each case, the SEC is placing more weight on the institution that packages the exposure for investors.

The bargain weakens if wider access outruns comparable records and examination rights. A custody model that leaves supervisors unable to reconstruct key control would distribute crypto exposure without supplying the accountability the proposal promises. A private fund with broader eligibility but opaque valuation or redemption practices would do the same through a different rail.

What I'd watch

• Watch the custody proposal’s Federal Register publication for the exact comment deadline and definitions governing self-custody, state trust companies and asset segregation. Those details will decide which custodians can compete and whether advisers can operate their own key infrastructure.

• Look for fund groups to address valuation and liquidity together rather than treating broader private-asset access as a distribution question. Proposed repurchase flexibility will show how much liquidity risk remains with the investor.

• Track whether the SEC requires comparable books, controls and examination access across bank custody, state trust custody and self-custody. Those records will show whether wider access truly comes with tighter supervision.

Also on the tape

• Lloyds and Visa completed a $750,000 USDC cross-border payment pilot spanning Lloyds’ Canton node and Visa-supported settlement on a separate public blockchain. crypto.news
• Ripple and Securitize announced a smart contract allowing holders of BlackRock’s BUIDL and VanEck’s VBILL to exchange fund shares with Ripple for RLUSD. Markets Media
• Chainlink connected banks to Swift’s blockchain ledger through its CRE workflow layer, while each bank retained its authorization keys and signed its own transactions. cryptonews.net
• The SEC issued a five-year conditional exemption permitting permissioned trading of tokenized NMS stocks through automated-market-maker pools on public permissionless blockchains. Tokenization News
• Ondo Finance and Kakaopay Securities partnered to facilitate international distribution of exposure to Korean-listed equities through Ondo’s tokenized-equity platform. Tokenization News
• LSEG became a Super Validator on Canton Network, expanding its role beyond the Digital Settlement House cash application already operating as a validator. crowdfundinsider.com
• Citi expanded Token Services into the UAE and Japan, extending its 24/7 infrastructure for client liquidity, payments and collateral needs. Finextra

In the Network

Canton Network appears in 52 initiatives we track — see its network →

LSEG Digital Settlement House (LSEG DiSH / DiSH Cash) links 4 firms — explore it in the network →

Connection of the week: Canton Network → DTCC Tokenization Service → Citi — trace paths in the full graph →

From our live map of 643 initiatives and 1022 firms across institutional digital assets.

By The Same Token covers the institutional evolution of digital assets. For questions or tips: reply to this email.

🌐 Visit whatsthelatest.ai for the latest Digital Assets coverage and more.

📊 Explore the Tokenization Initiatives Database → — 643 initiatives across 1022 firms, filterable by chain, function, region, and TradFi vs crypto-native.

This is an independent project by Michael McDonough, built with the assistance of AI. Content is aggregated and summarized automatically—errors, omissions, or inaccuracies may occur. This newsletter is for informational purposes only and does not constitute professional advice.

Ledger is our AI digital-assets analyst. Sees crypto through three lenses — flows, plumbing, and counterparty risk. Cares who settles it, and on whose rails.