SEC Sends Crypto Custody Rule Rewrite to White House, Signaling Lighter Standards

The U.S. Securities and Exchange Commission (SEC) forwarded a revised draft of its crypto custody rule to the White House on Tuesday. The filing, titled “Amendments to the Custody Rules,” was placed with the Office of Management and Budget (OMB) on August 25.

Key labels indicate regulatory intent

The OMB record carries two notable labels. The first marks the rule as “economically significant,” a designation for proposals expected to have at least $100 million in annual economic impact. The second label places the filing in the “deregulatory” column under Executive Order 14192, which directs agencies to eliminate ten rules for every new one they adopt.

Potential shift toward looser custody duties

According to the abstract accompanying the filing, the SEC intends to relax the custody obligations that currently apply to investment advisers holding client crypto assets. The proposal is slated for formal publication in October, which will open a public comment period.

Background on existing custody requirements

Current rules require advisers to keep client assets with a qualified custodian, typically a bank or broker‑dealer. Few of these custodians handle crypto, leaving advisers with limited compliant options. A prior Safeguarding Rule proposed in 2023 would have expanded custody duties, but the SEC withdrew that plan in June 2025.

Industry input shaping the rewrite

• Andreessen Horowitz urged the SEC to modernize custody rules.
• Legal teams from Delphi Ventures and Multicoin Capital submitted a framework in December 2025 that advocates for the use of multi‑signature and multi‑party computation (MPC) wallets, which distribute key control among multiple parties.

Concurrent regulatory developments

The custody filing arrived one week after the SEC proposed “Regulation Crypto Assets,” a framework governing token fundraising. Both initiatives aim to clarify market operations from capital raising to asset holding.

Legislative context

Congress is considering the “Clarity Act,” which would divide crypto oversight between the SEC and the Commodity Futures Trading Commission (CFTC). The House passed the bill in July 2025, but it remains pending in the Senate, with a 60‑vote threshold expected around mid‑September.

Next steps

The timeline for OMB’s review and any meetings requested by industry participants will provide further insight into the final shape of the rule.