BOSTON (Reuters) - Billionaire investor George Soros, whose stock-picking career has spanned nearly four decades, said he will manage money only for himself as new regulations threaten to crimp the hedge fund industry he made famous.

The octogenarian fund manager, known as much for earning $1 billion on a nervy currency bet as for giving away millions to support liberal causes, told investors that he will return roughly $1 billion to outside investors and turn Soros Fund Management into a family office.

Keith Anderson, who has been Soros' chief investment officer since 2008, will leave the firm.

In a letter to investors, Soros' two sons cited impending industry regulation as a reason for returning the money the fund still oversaw for outsiders, which is a relatively small percentage of the roughly $25 billion Soros oversees.

Bloomberg first reported the news.

Under the new Dodd-Frank Act, hedge funds will be forced to register with financial regulators, giving the Securities and Exchange Commission fresh insight into exactly how these generally secretive portfolios make money. But family offices are treated more leniently under the new regulations.

At a time where many men of his age have retired, Soros, who will soon be 81, joins a growing list of wealthy and well-established fund managers to reconfigure the business. Carl Icahn another long-time fund manager recently also returned money to outsiders.

But there is also a growing number of younger fund managers who are preferring to closing up shops to manage only their own money as new regulations threaten to dramatically change the $2 trillion hedge fund industry.

Stanley Druckenmiller, Soros' long-time deputy who helped engineer Soros' winning bet against the British pound in 1992, closed up his shop as did Chris Shumway, who was mentored by another industry great, Julian Robertson.

While Soros' decision to return money sounds dramatic, the move may be more symbolic than disruptive. Soros has effectively been managing mostly family money since reorganizing the Quantum fund over a decade ago after heavy losses. At that time Druckenmiller split from Soros and the Quantum fund pursued a less aggressive strategy.

(Reporting by Svea Herbst-Bayliss, editing by Gerald E. McCormick, Dave Zimmerman)