USDSEC Sends Crypto Custody Rewrite to White House Review
Proposal points toward lighter rules for investment advisers holding digital assets
TL;DR
- The SEC has advanced a proposed rewrite of crypto custody rules through White House regulatory review.
- The filing is classified as deregulatory and economically significant, signaling an effort to modernize custody requirements and reduce outdated burdens.
- The initiative forms part of a broader SEC shift under Paul Atkins that also includes crypto offering rules and other digital-asset guidance.
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The U.S. Securities and Exchange Commission has sent a proposed rewrite of its crypto custody rules to the White House regulatory review process, advancing changes that would govern how investment advisers and investment companies hold digital assets for clients. The proposal, titled “Amendments to the Custody Rules,” reached the Office of Management and Budget on August 25, 2026, and carries a deregulatory classification.
The Office of Information and Regulatory Affairs, a division of the Office of Management and Budget that reviews federal regulations before publication, is reviewing the proposal. The SEC said it has received questions from investment advisers about how they can hold crypto assets for clients while meeting existing requirements.
“This rulemaking would clarify the framework for the custody of crypto assets for investment adviser and investment companies, as well as make other modernizations needed to remove burdens from certain outdated provisions that are no longer needed to provide investor protection given the evolution in the markets and security trading and holding practices,” the SEC said.
The proposal’s text had not been made public as of August 26, but its regulatory classifications provide information about the direction of the rulemaking. The filing is designated as economically significant, a category covering rules with at least $100 million in annual economic impact.
The proposal also falls into the deregulatory category under Executive Order 14192. President Donald Trump signed the order in January 2025, directing federal agencies to eliminate 10 existing regulations for every new regulation they issue. The classification places the custody rewrite within that broader regulatory-reduction policy.
The SEC’s regulatory agenda directly identifies crypto assets as part of the rulemaking and targets October 2026 for publication of a formal proposal. Publication would open the proposal to public comment before the agency proceeds toward a final rule.
SEC reverses course from earlier custody expansion
Existing SEC custody rules generally require investment advisers to keep client assets with qualified custodians, typically banks or broker-dealers. The sources describe relatively few such institutions as historically willing to provide crypto custody, leaving advisers with limited compliant options for holding digital assets.
The current initiative marks a change from the approach taken under former SEC Chair Gary Gensler. His 2023 Safeguarding Rule proposal sought to expand custody requirements, while SEC staff also probed investment advisers over their crypto custody practices.
The SEC withdrew that proposed Safeguarding Rule in June 2025, allowing the agency to reconsider its approach to custody regulation under new leadership.
Industry participants later pushed the SEC to modernize the framework. Andreessen Horowitz asked the agency to update its crypto custody rules, while lawyers representing Delphi Ventures and Multicoin Capital submitted a custody framework in December 2025.
That framework sought greater regulatory flexibility for multi-signature and multi-party computation, or MPC, wallets. Those arrangements can distribute control over cryptographic keys so that no single party has unilateral authority to move the assets.
The custody rewrite does not yet establish in public whether those technologies will receive specific treatment. The material instead confirms that the SEC intends to clarify custody rules for crypto assets while modernizing provisions it considers outdated.
Atkins broadens SEC crypto rulemaking
SEC Chair Paul Atkins has pursued a wider regulatory overhaul for digital assets alongside the custody initiative. The agency has issued guidance stating that memecoins are not securities and clarifying which staking activities can fall outside securities law.
The SEC and the Commodity Futures Trading Commission also released digital-asset guidance in March 2026 explaining how federal securities laws apply to crypto assets and transactions.
The SEC expanded that effort again on August 18, 2026, when it proposed “Regulation Crypto Assets,” which the agency called a “tailored offering regime” intended to help issuers raise capital while protecting investors.
SEC Chairman Paul Atkins said in the agency’s statement: “As we continue the Commission’s efforts to provide clarity for crypto markets, and as Congress works to establish a lasting regulatory framework, Regulation Crypto Assets seeks to provide … clear pathways to raise capital under the federal securities laws.”
Regulation Crypto Assets addresses how crypto issuers can raise capital, while the custody proposal addresses how investment firms may hold digital assets for clients. Together, the initiatives form part of the SEC’s ongoing effort to establish more tailored rules for digital-asset activities.
Another planned initiative is an innovation exemption. Atkins has said he intends to introduce a framework designed to fast-track certain crypto products, though that proposal has not yet been implemented. The exemption would provide regulatory relief to firms seeking to issue tokenized securities on decentralized or other novel platforms.
Congressional market-structure legislation remains pending
The SEC’s rulemaking is moving forward while Congress continues work on a broader digital-asset market-structure framework.
The House of Representatives passed the CLARITY Act by 294-134 in July 2025. The legislation would divide digital-asset oversight between the SEC and the CFTC.
The bill remains in the Senate, where it is expected to face a 60-vote threshold around September 15, 2026. Its passage prospects remain uncertain.
The SEC has continued advancing crypto-specific regulatory measures while that legislation remains unresolved. The custody proposal now moves through White House review before the agency’s targeted formal publication and public-comment process.
FAQ
What is the SEC custody proposal called?
It is titled “Amendments to the Custody Rules.”
Who is reviewing the proposal?
The Office of Information and Regulatory Affairs within the Office of Management and Budget.
What assets does the proposal address?
It directly addresses crypto assets held for clients by investment advisers and investment companies.
What direction does the filing indicate?
Its deregulatory classification points toward reducing or modernizing existing custody burdens.
This article has been refined and enhanced by ChatGPT.
