SEC Drafts Crypto Custody Rule Overhaul, Submits to White House

The U.S. Securities and Exchange Commission (SEC) has taken a procedural step toward rewriting how investment advisers and investment companies handle client custody rules—potentially including clearer guidance for crypto asset custody. The agency’s proposal was submitted on Aug. 25 to the Office of Information and Regulatory Affairs (OIRA), where it will undergo review by the White House Office of Management and Budget before returning to the SEC and, if approved, being opened for public comment.

According to the SEC’s regulatory agenda, the rules are intended to reduce uncertainty over how regulated firms may hold crypto for clients while complying with federal securities requirements tied to the Investment Advisers Act and the Investment Company Act. The SEC has not yet published the full proposal for public view, and OIRA retains the ability to request revisions before the SEC considers whether to advance the draft.

Key takeaways

• The SEC submitted “Amendments to the Custody Rules” to OIRA on Aug. 25, a necessary step before any potential public rulemaking.
• The proposal would address custody practices for investment advisers and funds, including how those entities may custody crypto assets for clients.
• The agency says the intent is to clarify compliance expectations and reduce uncertainty currently affecting institutional crypto custody.
• The broader context includes the SEC’s shift toward rulemaking under current leadership, as the CLARITY market-structure bill faces delays in Congress.

OIRA review marks a new phase for custody-rule changes

Under the U.S. regulatory process, submissions to OIRA are typically part of the administration’s review pipeline, which includes assessing potential economic impacts and other policy considerations. The SEC’s regulatory agenda indicates it is considering either amendments to existing custody rules or new provisions under the Investment Advisers Act and Investment Company Act.

The SEC’s agenda framing highlights compliance clarity as the core objective: institutions have needed more predictable standards for how they can custody digital assets while meeting securities-law obligations. Still, the proposal has not yet been released, so investors and service providers will have to wait to see the exact custody mechanisms and compliance conditions the SEC is considering.

The timeline also matters. Even after the OIRA review, the SEC must decide whether to issue the draft publicly for comment. In the meantime, the drafting remains in a pre-public phase, leaving the precise details—such as how the SEC plans to define permissible custodial arrangements for crypto—unknown.

Why crypto custody rules are now a focal point

Institutional participation in crypto markets has long been tied to custody infrastructure and compliance. Custody is not simply a technical function; it’s also a legal and regulatory question tied to fiduciary duties and the requirement to protect client assets. By exploring custody-rule changes for investment advisers and investment companies, the SEC is effectively aiming to address a practical bottleneck: when custody standards are ambiguous, regulated firms may be more cautious about offering crypto exposure to clients—or they may rely on arrangements that are harder to defend under existing guidance.

The SEC’s stated intent—to clear up uncertainty—suggests that regulators view the current framework as insufficiently clear for modern portfolio practices that increasingly include crypto. However, the proposal is still preliminary, and the fact that it is under review means the agency could adjust its approach after OIRA feedback.

Rulemaking momentum under SEC leadership

Multiple developments point to a broader strategic shift at the SEC. Since Paul Atkins became chair in 2025, the agency has increasingly emphasized formal rulemaking over what it previously treated as “regulation through enforcement.” Atkins pledged to change course by using established rulemaking channels to set industry expectations rather than relying primarily on enforcement actions to define the regulatory boundary.

That strategic shift is also reflected in past enforcement posture. Earlier coverage noted that the SEC dismissed several cases against major crypto companies in 2025, including its lawsuit against Coinbase, as it moved to reshape its approach to digital assets.

While the custody-rule proposal is not itself an enforcement action, it aligns with the same direction: creating clearer standards that regulated firms can plan around. If the SEC ultimately issues the draft for public comment and it advances to final rulemaking, the result could materially affect institutional compliance planning for advisers and investment funds that want to include crypto in client portfolios.

Congressional bill delays keep regulatory uncertainty in focus

The SEC’s custody initiative is unfolding while at least one other major policy effort remains stalled. As Bloomberg reported, the proposed rule is part of the agency’s broader push to advance the Trump administration’s digital asset agenda as the CLARITY market structure bill remains blocked in the Senate.

Earlier reporting from Cointelegraph noted that the CLARITY bill was expected to face a cloture vote after lawmakers return from the August recess in September. With that legislative path uncertain, regulatory clarity on custody and compliance could take on added importance for market participants—even if it comes through the SEC’s rulemaking process rather than Congress.

In other words, while the legislative debate over market structure continues, the SEC is also working on narrower but highly practical rules that govern how investment firms hold assets. For institutions, that distinction can matter: the ability to custody crypto within a clear regulatory framework may be a nearer-term determinant of product development and client offering viability.

What to watch next

Readers should focus on whether the OIRA review prompts changes to the draft and, crucially, whether the SEC eventually releases the custody proposal for public comment. The most important unknown is what specific custody standards the SEC will propose for crypto holdings, since that will determine how institutions adjust compliance processes and custodial arrangements.