The U.S. Securities and Exchange Commission is preparing to revise its crypto custody rules. The SEC has sent its regulatory proposal to a White House review office.
The proposal aims to make it easier for investment advisers to hold crypto assets on behalf of clients. The SEC also plans to clarify the custody requirements that investment companies must follow.
However, the White House review does not mean the regulation has been approved. The proposal has yet to be released publicly and has not become a final rule.
SEC plans to modernize crypto custody rules
The Office of Information and Regulatory Affairs, which operates under the Office of Management and Budget, received the proposal on Aug. 25. OIRA reviews significant federal regulations before publication.
In OIRA records, the proposal appears under the title “Amendments to the Custody Rules.” It is being tracked under RIN 3235-AN46.
The records classify the proposal as “economically significant.” However, the regulation has no statutory deadline.
The SEC said it had received numerous questions from investment advisers about the existing rules. These questions focus on the conditions under which advisers may hold clients’ crypto assets.
According to the agency’s regulatory agenda, the current system does not adequately address the characteristics of digital assets. The SEC therefore wants to adapt the custody framework to the crypto market.
The regulation will cover investment companies as well as investment advisers. However, the SEC has not yet published the proposal’s detailed text.
It therefore remains unclear how the definition of a qualified custodian might change. Requirements for self-custody and on-chain transactions also remain uncertain.
What does the White House review mean?
OIRA operates within the White House Office of Management and Budget. The office evaluates the economic and administrative impact of significant federal regulations.
During the review, OIRA may ask the SEC to make changes. It may also assess the proposal with other federal agencies.
Completing this process will not put the proposal into effect. The SEC may then release the regulation for public comment.
Market participants will be able to submit feedback during the comment period. A final rule could emerge only after further review.
The SEC’s official schedule anticipates publishing the proposal in October 2026. However, that date is not a binding deadline.
Crypto regulation accelerates under Paul Atkins
SEC Chair Paul Atkins previously said the existing custody rules were not designed for crypto assets. In July 2025, Atkins said he had instructed staff to update the system.
Over the past year, the SEC has pursued sweeping changes to digital asset regulation. The agency has issued new guidance on whether memecoins qualify as securities.
It has also clarified which staking activities fall outside securities laws. The SEC has separately prepared a regulatory framework for crypto asset offerings.
The proposal, called “Regulation Crypto Assets,” would provide companies with a tailored capital-raising framework. It aims to facilitate token offerings while maintaining investor protections.
The market is also waiting for the innovation exemption announced by Atkins. The exemption could give tokenized securities projects greater regulatory flexibility.
New rules could reshape the institutional crypto market
Custody rules determine which firms investment advisers may work with. Any changes could therefore directly affect institutional demand for crypto.
Clearer rules could reduce legal uncertainty for funds and advisory firms. They could also make it easier to include tokenized assets in traditional investment products.
However, looser custody standards could raise new security concerns. Private key protection and the segregation of client assets remain critical issues.
The proposal’s actual impact will become clearer once the detailed text is published. The latest development indicates that it is moving closer to the public comment stage.
