WASHINGTON — The U.S. Securities and Exchange Commission's proposed rewrite of crypto custody rules for investment advisers and investment companies entered White House review on Aug. 25. The Office of Information and Regulatory Affairs, an Executive Branch body, received the economically significant proposal, identified as RIN 3235-AN46, for pre-publication review before the SEC can publish it.
This proceeding marks a new regulatory trajectory for the SEC under Chairman Paul Atkins. The agency formally withdrew its prior 2023 safeguarding proposal in June 2025, ending that rulemaking path. The current draft therefore commences a new rulemaking rather than reviving the earlier proposal.
In the interim, the SEC's investment-management staff established a practical baseline for digital asset custody through a no-action letter issued Sept. 30, 2025. The letter provided clarity for registered advisers and regulated funds treating certain state trust companies as banks for crypto custody, provided specific conditions were met.
Those conditions covered the custodian's authorization, robust safeguarding policies, audited financial statements and independent control reports. Custody agreements had to ensure segregation of client or fund assets and bar lending, pledging or rehypothecation without prior written consent. Advisers and funds were required to disclose material risks and determine that employing the chosen custodian served clients' and shareholders' best interests.
Despite its utility, the no-action letter carries no legal force—it is a staff enforcement position that has served as the operational baseline for investment advisers, funds, banks and state trust companies in crypto custody. The SEC's current custody rewrite brings this existing baseline into formal rulemaking.
According to the Unified Agenda, the SEC is considering changes to investment adviser client assets and fund assets, specifically including crypto, with an October 2026 target for a notice of proposed rulemaking. That date represents an internal planning target, not a legal deadline.
Registered investment advisers and investment companies face direct impact from this rulemaking, as their custody arrangements rely heavily on institutions meeting federal requirements. This implicates banks and state trust companies, raising commercial stakes for traditional financial entities in the digital asset space.
The published OIRA records do not yet contain the operative proposal language, leaving the specific direction of changes to eligibility criteria, control mechanisms or client asset safeguards unresolved. The eventual release of the SEC's full proposal will define which institutions are legally eligible to custody crypto for regulated entities and the specific safeguards required, establishing new parameters for institutional digital asset custody.
