The Securities and Exchange Commission (SEC) sent its crypto custody rule rewrite to the White House on Tuesday, with the text remaining secret. According to reports from Bloomberg, the proposal, called Amendments to the Custody Rules, reached the Office of Management and Budget (OMB) on August 25. The rule would 'clarify the framework for the custody of crypto assets by investment advisers and investment companies', as reported by PANews citing Bloomberg. The proposal would respond to institutions' inquiries on how to custody digital assets in compliance and remove some existing custody requirements deemed 'outdated' due to market evolution and current trading and custody practices. The agency stated 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.
The filing carries two critical labels that reveal the SEC's direction. As reported by CoinDesk, the first label marks the rule as economically significant, indicating rules with at least $100 million in yearly economic impact. More significantly, the filing sits in the deregulatory column under Executive Order 14192, which President Donald Trump signed in January 2025. This order tells agencies to scrap ten rules for every new one they write, clearly signaling the SEC plans to loosen crypto custody duties, not tighten them. The proposal would clarify the custody framework for crypto assets while making other changes to regulations covering advisory client and fund assets, with some existing requirements potentially being eliminated where the agency determines changes in markets and current asset-holding practices have made them unnecessary.
The existing rule forces advisers to park client assets with a qualified custodian, usually a bank or broker-dealer, according to CoinDesk reports. However, few of those firms would touch crypto, leaving advisers with almost no compliant way to hold it. Former Chair Gary Gensler had previously pushed for wider custody duties through his 2023 Safeguarding Rule, which would have expanded custody requirements, though his staff had also probed advisers over custody practices. The agency withdrew that plan in June 2025, as reported by crypto.news. The SEC said its planned rule would clarify the custody framework for crypto assets while making other changes to regulations covering advisory client and fund assets.
Venture firm Andreessen Horowitz asked the SEC to modernize crypto custody rules, as reported by CoinDesk. In December 2025, lawyers from Delphi Ventures and Multicoin Capital sent the agency a custody framework that asks for room to use multi-signature and multi-party computation (MPC) wallets. These tools split key control, so no one party can move the assets, providing more secure custody solutions for institutional clients. The proposed amendments would apply to rules under both the Investment Advisers Act of 1940 and the Investment Company Act of 1940, according to the SEC's regulatory agenda.
The SEC has noted that it anticipates the publication of the proposed rulemaking will occur no later than October, 2026, according to AMBCrypto reports. Once published, there will be a minimum of 60 days for members of the public to provide comments on the proposed rules. However, Commissioners are prohibited from voting on or disclosing information about the proposed rulemaking prior to completion of the OIRA review. These proposed amendments have yet to be released publicly and therefore cannot be implemented by industry participants at this time. The rule will take effect only after OMB review, a vote by SEC commissioners, and public comment. If the proposal moves forward, the SEC would generally open a public comment period of at least 60 days before drafting a final rule and putting it to a commission vote. The proposal provides some guidance regarding what is expected of a custodian, but does not provide absolute certainty immediately.
