SEC advances crypto custody rule, sends proposal to White House

The U.S. Securities and Exchange Commission (SEC) has forwarded a draft rule that would update custody requirements for crypto assets held by investment advisers and investment companies to the White House Office of Management and Budget (OMB) for review.

What the proposal aims to do

The rule seeks to clarify how registered advisers and investment companies may hold digital assets for clients while complying with existing custody obligations under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. It also proposes to remove certain legacy custody requirements that the agency deems outdated given current market practices.

Regulatory context

The proposal follows a broader SEC agenda under Chair Paul Atkins that includes three crypto‑related rulemaking projects for 2026, covering custody, broker‑dealer activities, and market structure. The agency has indicated it will continue to use its existing statutory powers even as Congress works on the Digital Asset Market Clarity Act.

Next steps

After OMB completes its review, the draft will return to the SEC for a commission vote. If approved, the full text will be released for a public comment period of at least 60 days, after which the SEC staff will consider feedback before finalizing the rule.

Background

In June 2025 the SEC withdrew a previous “Safeguarding Advisory Client Assets” proposal that would have expanded custody requirements for digital assets. The current custody amendment is a separate effort under the new chairmanship.