SEC crypto custody rewrite enters White House review with key rules still undisclosed

The U.S. Securities and Exchange Commission (SEC) has submitted its revised custody rules for investment advisers and funds, including provisions for crypto assets, to the White House for review as of August 25. The submission initiates a pre‑publication review of a proposal that could affect advisers, investment companies and the custodial institutions that hold their assets.

Review timeline and status

The Office of Information and Regulatory Affairs (OIRA) lists the amendment as pending at the proposed‑rule stage, with no statutory deadline. The Unified Agenda indicates an agency‑targeted date of October 2026 for a notice of proposed rulemaking, though this is a planning target rather than a legal deadline.

Scope of the proposed changes

The draft focuses on custody arrangements for investment adviser client assets and fund assets that include crypto. It could affect banks and state‑trust companies that meet federal custody requirements, but the OIRA record does not disclose specific language on eligibility, controls or safeguards.

Background and interim guidance

In June 2025 the SEC withdrew its 2023 safeguarding proposal, ending that rulemaking track and signaling the need for a new proposal. Meanwhile, SEC investment‑management staff issued a no‑action letter on September 30, 2025, stating they would not recommend enforcement against registered advisers or regulated funds that treat certain state trust companies as banks for crypto custody, provided specific conditions are met. Those conditions include proper authorization, safeguarding policies, audited financial statements, independent control reports, custody contracts, risk disclosures and best‑interest determinations. Custody agreements must segregate client or fund assets and prohibit lending, pledging or rehypothecation without written consent.

Next steps

The forthcoming SEC proposal will move the current staff guidance into a formal rulemaking process, opening a substantive debate over which institutions may custody crypto assets and the safeguards they must provide.