Key Takeaways
The SEC sent a proposal to overhaul its custody rules for how investment advisers and funds hold crypto to the White House Office of Management and Budget on August 25 for required review.
The rewrite would clarify how advisers can hold digital assets for clients and modernize provisions the agency calls outdated, after advisers asked how to comply with the existing rule.
It is the latest step in Chair Paul Atkins' broader crypto overhaul, building on August's Regulation Crypto Assets proposal, with a formal custody proposal targeted for October.
The Securities and Exchange Commission has moved its crypto rules one step closer to a rewrite. A proposal to change how registered investment advisers and funds hold digital assets for clients reached the White House Office of Information and Regulatory Affairs, part of the Office of Management and Budget, on August 25, a step first reported by Bloomberg. That review is a required checkpoint before the Commission can vote to publish a rule and open it for public comment.
The agency said it acted after investment advisers asked how they can hold crypto for clients while meeting existing requirements. The rewrite, it said, would clarify the custody framework and "remove burdens from certain outdated provisions" that no longer add investor protection given how trading and holding have changed. The current custody rule was written for stocks and bonds, and advisers have spent years unsure how it maps onto assets that live on a blockchain.
The move fits a wider pattern under Chair Paul Atkins, who has spent the past year reshaping how the agency treats digital assets. The SEC has issued guidance that memecoins are not securities and that some staking sits outside securities law, and last week it proposed Regulation Crypto Assets, a tailored regime for raising capital through token sales that the Commission detailed on August 18. A custody overhaul would fill in the other side, where those assets sit once they are held.
Nothing is final. The unified agenda targets a formal proposal in October, after which a comment period and a Commission vote would follow. For the banks and advisers building custody desks, the direction matters as much as the timing. It is the same institutional plumbing being laid by Citi's move to hold Bitcoin directly for institutions, and it is being built while the rules are still taking shape.
People Also Ask
What is the SEC custody rule?
It is the regulation that governs how registered investment advisers and funds safeguard client assets, including where those assets are held and by whom. The current version was designed for traditional securities, which is why the SEC is proposing to update it for crypto.
What would the custody rule change for crypto?
The proposal would clarify how advisers and funds can hold digital assets for clients while keeping investor protections, and remove provisions the agency views as outdated. The exact text becomes public only after the White House review and a Commission vote to propose it.
When would the new custody rule take effect?
Not soon. The SEC's agenda targets a formal proposal in October, and any rule would then go through a public comment period and a final Commission vote before taking effect.
How does this relate to Regulation Crypto Assets?
Regulation Crypto Assets, proposed August 18, covers how tokens are offered and sold. The custody rewrite covers the other side, how those assets are safely held once an adviser or fund holds them for clients. Together they are two halves of Chair Atkins' crypto framework.