SEC’s Proposed Crypto Custody Rule Faces Pushback from States

An SEC effort to impose a uniform standard on investment funds for storing clients’ assets, including cryptocurrencies, has set up a potential clash with state regulators with their own rules for providing custodial services.

The US Securities and Exchange Commission on Feb. 15 proposed establishing a standard for banks and other firms looking to safely store client assets entrusted to hedge funds, private equity funds, pension funds, and other investment firms.

The proposal comes in the wake of several high-profile crypto firm collapses and raises concerns about the ability of state-chartered banks to meet a singular federal standard.

“Some state ...