SEC submits crypto custody overhaul to White House

The U.S. Securities and Exchange Commission on Aug. 25 submitted proposed amendments to custody rules for investment advisers and funds to the Office of Information and Regulatory Affairs at the White House Office of Management and Budget. The filing remains confidential and would change or add provisions under the Investment Advisers Act and the Investment Company Act to cover custody of client assets, including digital tokens.

OIRA will review the draft and may request revisions before returning it to the SEC. If returned, the commission’s commissioners would vote on whether to publish the proposal for public comment. The SEC’s regulatory agenda lists custody-rule amendments as an item intended to reduce uncertainty about how firms can hold crypto while complying with securities laws.

The amendments are intended to address gaps advisers and funds have identified when deciding how to hold crypto for clients. Regulators and market participants have debated whether custody frameworks created for traditional securities cover new forms of digital assets and the services that support them. The SEC has not released the draft text, so specific requirements on custody arrangements, recordkeeping or asset segregation are not yet available.

The filing follows a shift at the SEC after Paul Atkins became chair in 2025. Atkins has called for policymaking through formal rulemaking rather than relying primarily on enforcement. In 2025 the agency dismissed several enforcement cases against major crypto firms, including its lawsuit against Coinbase, as part of that reorientation.

The submission also occurs while federal legislation on digital assets remains unresolved. The CLARITY market-structure bill is stalled in the Senate and is expected to face a cloture vote after lawmakers return from the August recess in September. Until Congress acts, agency rulemaking could determine how advisers and funds handle crypto custody.

Banks, specialized crypto custodians and other market firms that offer custody services are likely to assess the proposal for effects on custody models, third-party arrangements and reporting obligations. Industry participants and legal advisers are watching the OIRA review because the office can request substantive changes and the timing of its review affects when the proposal reaches the public for comment.

After a public comment period the SEC could revise the proposal and then vote on any final amendments. The agency has not announced a timeline for releasing the draft custody rules for public review.