SEC crypto custody rules rewrite begins White House review
The U.S. Securities and Exchange Commission (SEC) proposed new crypto custody rules for investment advisers and companies to clarify digital asset holding. S. Securities and Exchange Commission (SEC) has sent a proposed rewrite of its crypto custody rules to the White House for review, marking a significant step in clarifying how investment advisers and investment companies can hold digital assets.
This new framework, officially designated as RIN 3235-AN46 and titled “Amendments to the Custody Rules,” entered the White House’s Office of Management and Budget (OMB) review on August 25, 2026. This move signals a shift towards a potentially more accommodating regulatory environment for crypto assets under SEC Chair Paul Atkins and President Donald Trump’s administration.
Understanding the SEC Crypto Custody Rules
The proposal directly addresses long-standing questions from the industry about how to comply with current custody requirements when dealing with digital assets. It also comes after the SEC withdrew a separate, more restrictive safeguarding proposal from 2023. This current iteration aims to streamline processes and remove what the SEC considers outdated provisions, which could facilitate broader institutional engagement in crypto markets.
The latest SEC proposal seeks to clarify custody requirements specifically for crypto assets, a stark contrast to previous approaches. The agency’s regulatory agenda for 2026 indicates the rule would cover both investment adviser client assets and investment-company fund assets. This broad scope shows an intent to provide comprehensive guidance across various investment vehicles.
It also signals a distinct departure from the earlier 2023 proposal, which was issued under former SEC Chair Gary Gensler. That safeguarding rule would have significantly expanded custody requirements to all client assets, including crypto, and introduced new protections related to asset segregation and custodian insolvency. The withdrawal of that proposal in June 2025 paved the way for the current, reportedly more industry-friendly, framework.
Shifting regulatory approach at the SEC
Under current SEC Chair Paul Atkins, the agency has adopted a more crypto-friendly stance, moving away from a primary focus on enforcement towards clearer rulemaking. Atkins previously emphasized the importance of self-custody as a “foundational American value.” This philosophical shift underscores the agency’s current direction regarding digital assets.
This change is critical for a market increasingly looking for regulatory clarity. Investment firms, keen to engage with the rapidly evolving crypto space, require concrete rules to operate without constant fear of regulatory action. They need clear guidance on how best to secure client assets in a sector that challenges traditional financial definitions.
Industry and expert reception
The crypto industry has largely welcomed this new regulatory push for clarity, having long advocated for updated guidance. Firms like Andreessen Horowitz have previously urged the SEC to modernize its crypto custody rules. Lawyers representing Delphi Ventures and Multicoin Capital even submitted a detailed custody framework to the SEC in December 2025, advocating for multi-signature and multi-party computation (MPC) wallets.
Amy Lynch, President and founder of FrontLine Compliance, commented on August 26, 2026, that the SEC’s plan represents “yet another attempt to deregulate markets.” She believes the focus will heavily rest on how digital assets can be held at qualified custodians and how their definition might evolve. This highlights the industry’s hope for broadened custodial options.
Clarifying roles for qualified custodians
The current adviser rule generally mandates a qualified custodian to hold client funds and securities in separate accounts. However, applying these legacy rules to digital assets, with their unique technological properties, has proven challenging. The SEC’s 2025 no-action letter, permitting state-chartered trust companies to act as qualified custodians for digital assets under specific conditions, offered a glimpse into potential solutions.
Johanna Collins-Wood, General Counsel at Bitwise, had also previously suggested that the SEC appeared poised to “focus on clarifying the rules and reducing burdens.” Her comments indicate an expectation that the new framework will make it easier, not harder, for financial institutions to engage with crypto. This sentiment reflects widespread optimism for sensible regulation.
Political backing and economic implications
President Donald Trump’s Executive Order 14192, signed in January 2025, instructs federal agencies to scrap ten old rules for every new one they introduce. The SEC’s current proposal aligns with this directive, carrying a “deregulatory” tag. This political mandate provides significant impetus for the commission to streamline its rules, particularly in emerging sectors like crypto.
The OMB has also labeled the proposal as “economically significant,” a designation for rules with at least $100 million in yearly economic impact. This classification underscores the potential ripple effects across the financial sector. It suggests the changes could substantially influence how institutions interact with digital assets, potentially unlocking new investment avenues.
Broader crypto policy shifts
This custody rewrite isn’t happening in a vacuum; it’s part of a broader shift in the administration’s crypto policy. The formal rescission of Staff Accounting Bulletin No. 121 (SAB 121) in January 2025, which had made crypto custody economically prohibitive for publicly traded banks, further eased the path for institutional involvement.
This change removed a major hurdle for banks looking to offer custodial services for digital assets, bolstering overall crypto investment vehicles.
Moreover, the House passed the Clarity Act in July 2025, with a notable vote of 294-134. This bipartisan support signals a legislative appetite for clearer crypto regulations. Such actions collectively point towards an environment increasingly conducive to integrating digital assets into the mainstream financial system, potentially paving the way for further market dynamics.
What happens next for the custody rules?
With the proposal now under review at the White House, the Office of Information and Regulatory Affairs (OIRA) typically takes up to 90 days to complete its assessment. During this period, OIRA scrutinizes the rule’s economic impact and its alignment with the administration’s policies. The review process is a critical checkpoint before the proposal moves forward.
The SEC’s regulatory agenda targets October 2026 for a formal notice of proposed rulemaking. This would initiate a public comment period, allowing stakeholders to provide feedback on the draft provisions. While the specific text isn’t public yet, this next phase will offer the first detailed look at the SEC’s revised approach to crypto custody.
The industry will be watching closely for how these amendments truly redefine the landscape for digital asset custodianship.