The US Securities and Exchange Commission’s proposed crypto custody fallback could broaden investment choices while making them easier for larger advisers to offer.

The agency’s economic analysis says the expense of safeguarding assets and arranging independent oversight may lead smaller firms to decline to offer the service.

Approved on Oct. 1, the proposal would let advisers hold covered client crypto assets when an eligible custodian is unavailable, subject to safeguards. Table 8 models certain annual costs of $433,833 per adviser using that option.

That estimate includes an independent control report but leaves out some potentially significant technology costs.

For clients, the consequence could be that an asset might become…