Andreessen Horowitz (a16z) is urging the SEC to revise its custody regulations for digital assets held by registered investment advisers (RIAs). The firm submitted a letter advocating for the ability to directly hold crypto assets with specific conditions and proposed five principles to guide the reform. A16z’s efforts aim to clarify the relationship between the Custody Rule and crypto assets, ensuring that economic and governance rights are maintained while fostering investor protection.
Venture capital firm Andreessen Horowitz (a16z) is advocating for a significant revision of the Securities and Exchange Commission’s (SEC) regulations regarding the custody of digital assets by registered investment advisers (RIAs). In a formal submission to the SEC’s Crypto Task Force on April 9, 2025, a16z proposed that RIAs should have the capacity to directly hold crypto assets, contingent upon specific conditions and safeguards being properly defined.
The SEC’s forthcoming actions in response to a16z’s recommendations could reshape the framework within which advisers manage crypto assets, moving beyond traditional custodial methodologies. A16z, recognised as a prominent voice in the industry, continues to influence policy through its investment stake and active engagement with the regulatory landscape.
In support of its arguments, a16z published a blog on April 16, outlining five essential “Crypto Custody Principles,” aimed at guiding the reform process while ensuring robust investor protections. The firm highlighted its belief that updated guidance from the SEC on custody arrangements for crypto assets is essential, even as a temporary measure, until comprehensive rules are established.
A16z’s letter underscored the necessity for the SEC to grant RIAs the ability to self-custody security tokens—crypto assets classified as securities—while clarifying that such practices would not conflict with the existing Custody Rule or fiduciary responsibilities. RIAs typically manage client assets under strict rules established by the Investment Advisers Act of 1940, created for a different financial landscape that did not encompass private keys or blockchain governance.
The firm emphasised the need for the SEC to recognise the diversity among crypto assets and the varying availability of custody solutions. Specific assets confer economic or governance rights (e.g., staking or on-chain voting), which may not be accessible in conventional custody environments. Thus, a16z proposed that RIAs select third-party custodians that enable the exercise of these rights, suggesting that temporary self-custody should not be viewed as a custody transfer.
Moreover, a16z cautioned against rigid distinctions such as hot versus cold wallets, advocating instead for a flexible security architecture that mitigates risks of loss or theft, independent of the storage method. The firm clarified that its aim is not to broaden the Custody Rule’s scope beyond securities but to establish standards that enhance the Custody Rule’s objectives—such as security, periodic disclosures, and independent verification—within the context of new tokenised assets.
The timing of a16z’s letter coincided with remarks from the former Acting SEC Chair Mark Uyeda, who expressed intentions to reevaluate the $100 million threshold currently required for RIA registration. This ongoing discourse among SEC staff suggests that regulatory adjustments may be forthcoming to ease compliance burdens for smaller firms, indicating that the conversation on potential reforms is alive under the newly appointed Chair, Paul Atkins.
