WASHINGTON — The U.S. Securities and Exchange Commission submitted a proposed rewrite of its digital asset custody rules to the White House for review on Aug. 25. The Office of Management and Budget is now reviewing the confidential filing.
The rulemaking aims to clarify how investment advisers and investment companies can custody digital assets and remove provisions the SEC considers outdated given recent changes in trading practices and market structure.
This initiative is part of SEC Chair Paul Atkins' effort to modernize the regulator's approach to crypto. The proposal aligns with the Trump administration's policy agenda on digital assets.
The submission follows a series of crypto-focused actions from the agency. On Aug. 18, the SEC unveiled a separate framework called "Regulation Crypto Assets," intended to create a tailored offering regime for certain investment contracts involving crypto tokens. Commentators have connected this draft to Atkins' "Project Crypto," which aims to provide digital-asset businesses with a clearer pathway to raise capital in the United States while preserving investor safeguards.
The custody overhaul addresses a long-running debate regarding the protection of client assets in markets that operate differently from traditional securities venues.
Earlier SEC proposals, including one from 2023, sought to mandate that registered advisers keep customer crypto with qualified custodians—banks, broker-dealers, or trust companies—primarily to reduce the risk of loss if a firm fails.
The latest custody draft remains confidential while the White House review is underway. If approved, the SEC would typically open the proposal to public comment for a minimum of 60 days before considering any final rule.
