Skip links
Proposed US SEC Custody Rule

An Overview of the Proposed Custody Rule 223-1 by the U. S. Securities and Exchange Commission For Registered Investment Advisers

The Proposed Custody Rule 223-1  is a proposed rule by the U.S. Securities and Exchange Commission (SEC) regarding the custody of assets, securities, or funds of clients by Investment advisers. The Securities and Exchange Commission (SEC) made this known to the public in a press release on February 15, 2023.

Proposed Custody Rule by US SEC

Aim of the Proposed Custody Rule:

The proposed custody rule aims to modernize the regulatory framework on how investment advisers offer their products and services to their clients. It  also proposes complementary refinements to how advisers report custody information on Form ADV. Also, it highlighted the books and records investment advisers  are required to keep that are designed to improve the SEC’s oversight and risk-assessment abilities.

The US SEC proposal maintains the core purpose of protecting client assets from loss, misuse, theft, or misappropriation by advisers. It also protects client’s assets from  insolvency or financial reverses of the adviser. In addition, it  maintains the Commission’s ability to pursue advisers for failing to properly safeguard client assets under the Act’s antifraud provisions. 

Here are some of the key points of the Proposed Custody Rule:

  • The proposed custody rule seeks to simplify today’s complex and global financial markets and its application to better align with the Commission’s statutory authority.
  • Since the adviser will be dealing with an array of classes of assets, the proposed custody  rule requires minimum protection for the client’s assets held in advisory accounts. 
  • The proposed rule also would explicitly include discretionary authority to trade within the definition of custody under the Custody Act. 
  • The proposed rule seeks to change the existing regulation’s exclusion of certain physical assets from the requirement to retain client assets with a qualified custodian with respect to privately issued securities.

Under the Proposed Custody Rule, advisers with custody of client assets would be required to  segregate those assets by:

(1) Titling or registering the assets in the client’s name or otherwise  holding the assets for the client’s benefit. 

(2) Not commingling the assets with the adviser’s or any of its related persons’ assets, and 

(3) Not subjecting the assets to any rights, charges, security interests, liens, or claims of any sort in favor of the investment adviser or its connected parties or creditors, unless expressly permitted by the client in writing.

The Proposed Custody Rule Aims to Improve and Modernize Recordkeeping for Advisers.

Along with the proposed regulation, the Proposal also aims to improve and modernize the recordkeeping obligations for advisers. It is anticipated that these modifications would improve the Commission’s oversight of advisers’ safety procedures and rule compliance, which will advance investor protection.

In order to improve the accuracy of custody-related data made accessible to the Commission, its employees, and the general public, The US SEC is also proposing changes to Form ADV. These changes would align reporting requirements with the proposal.


It’s worth noting that this is a proposed rule, and it has not yet been adopted or implemented. The US  SEC is currently soliciting comments on the proposed rule within 60 days from the day of publication of the rules from stakeholders and the general public, and any final rule will likely take into account the feedback received. 
Follow A&D Forensics for Data-driven content on regulations, policy, and innovations in cryptocurrencies.

Contributor: Jerry

Leave a comment

This website uses cookies to improve your web experience.
Certified Cryptocurrency Investigation(CCI) Training

Learn how cryptocurrency related transactions, crimes are tracked, traced and prosecuted.

Step 1 of 2
Certified Cryptocurrency Investigation Training

Learn how cryptocurrency related transactions, crimes are tracked, traced and prosecuted.

Step 1 of 2

Learn how compliance could be a competitive advantage to your exchanges with all your AML, CTF, KYC and OFAC requirements.

Step 1 of 2
Smart Contract Audit

To speak to us regarding Smart Contract Audit, please fill the form below. We will make every attempt to respond to you as soon as possible

Call Direct: +2348036180089 | +2349095503040

Get in touch

To speak with us as regards our services, to make comments and ask questions, please fill the form below. We will reply as soon as possible.

Call Direct: +2348036180089 | +2349095503040


Onyekelu Chioma is a passionate and professional teacher with expertise on blockchain and cryptocurrency education. She is a renowned blockchain advocate in Africa with the belief that there are so many career opportunities to be leveraged on in the Blockchain Industry.

Chioma is the Head of Academic and Training, the Crypto Bootcamp Community, and a member of Stake holders in blockchain technology association of Nigeria (SiBAN).

Chioma’s passion for fourth industrial revolution technology has helped her hold key strategic positions in various private sectors, regulating the way for blockchain adoption in the continent of Africa.

As an experienced teacher, blockchain educator, and a cryptocurrency trading coach, she has trained a lot of students and assisted them in identifying their innate skills which enabled them to carve a niche so as to become experts in their chosen blockchain career.

She’s currently a Crypto Forensic Intern at A&D Forensics and undergoing her Masters studies in Blockchain and Cryptocurrency at University of Nicosia


Adedeji is a Forensic Investigation Practitioner and CertifiedBlockchain/Cryptocurrency Forensic
Investigator (CFE, CCI, CCFI & Reactor Certified) with more than Fifteen years of experience across few banks within the Nigeria Financial Sector and educator in Corporate workplace settings, Deji is uniquely qualified and involved in forensics analysis of Financial Infractions, Cryptocurrency crimes and designing plans that works for Government, Regulators, Law enforcement. He was appointed by SEC Nigeria as Member Virtual Asset and Fintech Regulatory framework drafting Committee, He is a member of Global Digital Finance’s KYC/AML working group in France and a member of the Industry led Thinktank that worked on and came out with FATF cryptocurrency Travel rule InterMessaging Standard for Virtual Assets (IVMS101) to help combat money laundering and terrorism financing using cryptocurrencies around the globe.
His law enforcement training efforts on new money and cybercrime have seen him train many law enforcement agents in various countriesn i.e Nigeria Police, Nigeria Army CyberWarfare command, Zambia Financial Intelligence Unit, Zambia Central Bank and more.
He is Chainalysis Sole Africa Investigative Partner helping law enforcement investigate criminal organizations using cryptocurrency to conceal illiccit activities across Africa, he is also a training Partner for Blockchain Intelligence Group based out of Canada.

Cryptocurrency Investigation Training

Learn how cryptocurrency related transactions, crimes are tracked,
traced and prosecuted.