For private fund managers using decentralized finance (DeFi) protocols in connection with their investment activities, technical compliance with the qualified custodian requirement under Rule 206(4)‑2 (Custody Rule) may not be possible. To the initiated, this comes as no surprise. Although the SEC amended the Custody Rule in 2003 to reflect then-modern custodial practices, those practices have since changed. An observation made by the SEC in its 2002 proposed Custody Rule amendments remains equally applicable today: “Advisers’ business practices also have evolved, increasing the likelihood that advisers may obtain custody of client assets in circumstances that [the SEC] may not have anticipated. . . .” In a guest article, Oscar Saunders, counsel at Linklaters, provides an overview of the qualified custodian requirement under the Custody Rule (Qualified Custodian Requirement), describes DeFi-related investment activities and illustrates how those activities may impact compliance with the Qualified Custodian Requirement. See “Navigating Custody and Other Regulatory Issues Associated With Digital Assets” (Aug. 4, 2022).