On February 15, 2023, the SEC proposed new Rule 223‑1 (Proposal) under the Investment Advisers Act of 1940 (Advisers Act) to address how investment advisers safeguard client assets (Safeguarding Rule). The Proposal significantly amends and replaces the current custody rule set out in Rule 206(4)‑2 under the Advisers Act (Custody Rule), but it also contains a number of potentially impractical modifications to target novel asset classes (notably, cryptocurrency assets). Although the Proposal includes substantial changes to the Custody Rule and accompanying practices, the implications for closed-end managers may be more limited and manageable compared to other recently proposed SEC rules. Nonetheless, industry experts anticipate substantial comments on the Proposal and a number of financial services trade groups have already written to the SEC asking that the comment period be extended by 60 days. In light of the Proposal being published in the Federal Register on March 9, 2023, the comment period will end on May 8, 2023. This first article in a two-part series summarizes the scope and key terms of the Safeguarding Rule and identifies the changes that are most likely to impact closed-end managers. The second article will describe the response of SEC commissioners and the private funds industry to the Proposal, including concerns about its purpose, overbreadth and unintended consequences. For coverage of other recently proposed rules, see our two-part series on the SEC’s proposed rules for overseeing service providers: “New Diligence, Monitoring and Recordkeeping Standards” (Dec. 1, 2022); and “Concerns, Criticisms and Critiques of the Practical Impact” (Dec. 15, 2022).