SEC Advances Crypto Custody Rules to White House for Review

The proposal, delivered to the White House on August 25, seeks to clarify the legal framework for holding crypto assets for clients. Under current standards, investment advisers struggle to navigate custody requirements written long before digital assets became standard in professional portfolios. The SEC aims to resolve these ambiguities while simultaneously pruning existing custody mandates that the agency now deems obsolete due to shifts in trading practices and financial market infrastructure.

Once the Office of Management and Budget completes its executive review, the text will return to the SEC. A commission vote will then determine whether the proposal is released for public comment. This initiative represents a distinct departure from the agency's June 2025 decision to withdraw the "Safeguarding Advisory Client Assets" rule, which had faced significant industry pushback. Under Chair Paul Atkins, the commission is pursuing a fresh approach, prioritizing internal rulemaking for areas clearly within its statutory authority while Congress continues to debate broader market structure legislation like the CLARITY Act.