The U.S. Securities and Exchange Commission has formally moved its proposed overhaul of crypto custody rules for investment advisers and investment companies into White House review, submitting the plan to the Office of Management and Budget on August 25.
The proposal would clarify how investment advisers and investment companies can hold crypto assets for clients while complying with existing SEC custody requirements. The agency noted that firms have raised questions about how digital assets can be held under rules written before crypto became part of regulated investment products and advisory portfolios. Alongside digital asset provisions, the SEC is considering removing some existing custody requirements it considers outdated because of changes in financial markets and current trading and asset-holding practices.
The proposed amendments would apply to rules under both the Investment Advisers Act of 1940 and the Investment Company Act of 1940. Under the existing framework, registered advisers with custody of client funds or securities generally must keep assets with a qualified custodian unless an exception applies. Crypto has raised additional questions because ownership and control can depend on private keys and blockchain-based custody systems.
Full details of the proposal will remain unavailable until the OMB completes its review. Once returned to the SEC, potentially with revisions, the commission’s three current Republican members would vote on whether to publish it for public comment. A proposed rule would then normally remain open for public comment for at least 60 days.
The move is a separate rulemaking effort under Chair Paul Atkins. In June 2025, the SEC withdrew the earlier safeguarding proposal introduced during former Chair Gary Gensler’s tenure, which would have expanded custody requirements for registered investment advisers and required assets to be maintained with qualified custodians. Industry participants had warned that plan could leave advisers with fewer options for holding digital assets.
Custody is one of several digital asset issues the SEC has moved into formal rulemaking under Atkins. The commission’s 2026 regulatory agenda also includes proposals covering crypto asset exemptions and safe harbors, broker-dealer rules, and market structure. The custody proposal is classified as economically significant on the federal regulatory agenda, and the SEC said it would evaluate the expected costs, benefits, and other economic effects while developing the rule.
