The U.S. Securities and Exchange Commission has advanced its proposed rewrite of custody rules for investment advisers and investment companies to the White House for review. The Office of Information and Regulatory Affairs received the proposal on Aug. 25, beginning the executive branch's vetting process for economically significant regulations before public release.
The new framework departs sharply from the SEC's approach under former Chair Gary Gensler. Gensler's 2023 custody proposal would have extended existing standards into crypto but never reached final adoption. Current SEC Chair Paul Atkins has withdrawn that effort and is pursuing a fresh draft designed to distinguish digital assets from traditional securities.
Traditional securities are held by qualified custodians such as banks, broker-dealers and state-chartered trust companies. Atkins has signaled a more accommodating stance toward crypto regulation throughout his tenure.
The revised framework will likely address self-custody solutions, multi-signature arrangements, staking protocols and lending activities. A critical component involves clarifying how custody can be verified in blockchain-based systems—essential for on-chain asset management.
SEC regulatory planning documents indicate the rule will modernize custody requirements for client and fund assets, specifically addressing crypto within those requirements.
The OIRA review scrutinizes major regulations for economic impact and precedes the SEC's ability to release the full text and seek a commission vote. The SEC is targeting October for public release, though the timetable could shift during the White House review.
After public release, the proposal would require a formal commission vote and public comment period before advancing toward final adoption.
