SEC proposes modernized crypto custody rules for investment advisers and funds, submitted to White House OMB for review.
Regulation & Gov ·
The SEC forwarded a proposal to modernize crypto custody rules to the White House Office of Management and Budget on August 25, targeting how investment advisers and funds hold digital assets for clients. The submission addresses questions investment advisers have raised about maintaining compliance with existing rules while managing crypto holdings, and aims to remove outdated provisions under both the Investment Advisers Act and Investment Company Act.
The proposal now enters a multi-stage review process: the White House office may request modifications before returning it to the SEC, which must then vote to release it for public comment. The custody overhaul fits within a broader regulatory shift under SEC Chair Paul Atkins, who has prioritized formal rulemaking over enforcement-based regulation and has already dropped several cases against crypto firms and released clarifying guidance on meme coins and staking activities.
What remains unclear is the specific language of the proposed rule changes and whether the White House will request substantive revisions before the SEC votes on public release. The timeline for final adoption is also unset, and the proposal's interaction with stalled legislative efforts like the CLARITY bill is still developing.