It likely applies. If the GP has authority to deduct management fees from fund assets, control distributions, or move fund money, the adviser may have custody under the SEC's definition.
Many private fund managers satisfy the custody rule through the audit exception: engaging a PCAOB-registered independent auditor and distributing audited financial statements to investors within 120 days of fiscal year-end. Discuss the specifics with counsel.
This article is for informational purposes only and does not constitute legal advice. Consult qualified professionals for guidance specific to your situation.