The U.S. Securities and Exchange Commission has moved a proposed overhaul of digital asset custody rules to the White House for regulatory review, a procedural step that could reshape how investment advisers and registered funds safeguard cryptocurrencies.
According to reports, the SEC submitted its proposed custody rule changes to the Office of Management and Budget on August 25, with the Office of Information and Regulatory Affairs now reviewing the proposal. The agency said investment advisers have raised questions about holding crypto assets while meeting existing custody requirements. The proposed changes seek to clarify how firms can safeguard digital assets for clients and would remove certain requirements regulators consider outdated amid changing market practices.
The proposal is part of a broader regulatory shift under SEC Chair Paul Atkins. The SEC and the Commodity Futures Trading Commission issued joint guidance in March on how securities laws apply to digital assets, while the SEC has separately indicated that some memecoins may not qualify as securities. The commission has also introduced Regulation Crypto Assets, a proposed framework for digital asset offerings, and continues to develop proposals covering broker-dealers and crypto market structure.
The SEC withdrew an earlier safeguarding proposal in June 2025 after industry concerns. The current initiative restarts custody rulemaking through a separate proposal, although the complete text remains unpublished. Specific provisions involving qualified custodians and custody arrangements therefore remain unclear until the SEC publishes the proposal for public review.
Once the White House review is completed, the proposal could return to SEC commissioners for a vote. If approved, the SEC would publish the proposal and open a public comment period, typically giving industry participants at least 60 days to respond. Investment advisers, funds, custodians and crypto companies could then assess the proposed requirements, and public feedback could prompt modifications.
Meanwhile, the SEC and CFTC have also launched a joint public comment process on swaps, security-based swaps, emerging products and the scope of each agency’s regulatory authority. Former CFTC Chairman Chris Giancarlo and former SEC Commissioner Steven Wallman submitted a comment letter warning that poorly designed rules could push profitable trading activity overseas. The agencies are moving forward as the CLARITY Act remains stalled in Congress, meaning compliance requirements may evolve through agency rulemaking rather than a single comprehensive statute.
A well-defined custody framework could provide legal certainty for institutional investors, potentially encouraging participation from pension funds, endowments and other large-scale investors. However, the final impact will depend on provisions that remain unpublished and could change before adoption.
