SEC Proposes New Crypto Custody Rules for Investment Advisers and Companies
SEC’s Crypto Custody Rule Rewrite Reaches White House Review
The U.S. Securities and Exchange Commission (SEC) has sent its proposed rewrite of crypto custody rules for investment advisers and companies to the White House for review. This step moves the new framework closer to becoming official after the SEC withdrew a separate 2023 proposal on the same topic.
The review began on August 25, 2025. The SEC’s plan aims to clarify how investment advisers and companies can safely hold crypto assets while following SEC rules. A custody rule is a regulation that requires financial firms to protect client assets by keeping them with a qualified custodian—a trusted third party like a bank or financial institution.
What the Proposal Aims to Change
- The SEC wants to update custody rules to include crypto assets, which are digital currencies like Bitcoin and Ethereum stored on a blockchain—a digital ledger that records transactions.
- The current rule covers client funds and traditional securities but does not clearly address crypto assets.
- The SEC says advisers and companies have raised questions about how to comply with custody requirements for crypto.
- The new proposal also intends to remove outdated provisions that create unnecessary burdens.
Key Differences from the 2023 Proposal
The SEC withdrew a 2023 proposal in June 2025 that would have expanded custody rules to all client assets, not just funds and securities. That proposal also included extra protections for client assets in case a custodian went bankrupt. The new rewrite focuses on clarifying crypto custody without those broader changes.
The 2023 proposal applied only to registered investment advisers, while the new version covers both advisers and investment companies. The SEC has not yet released the full text of the new proposal, so specific details about which entities can custody crypto or what controls will apply remain unclear.
What Happens Next
The White House Office of Information and Regulatory Affairs (OIRA) is now reviewing the proposal. The SEC’s regulatory agenda lists October 2026 as the target date for releasing a formal notice of proposed rulemaking. There is no legal deadline for the process, meaning it could take months or longer before the rules are finalized.
What Is Confirmed
- The SEC has sent a proposed rewrite of crypto custody rules to the White House for review.
- The proposal aims to clarify how investment advisers and companies can custody crypto assets under SEC rules.
- The SEC withdrew a separate 2023 proposal in June 2025 and is now working on a new version.
- The review process began on August 25, 2025.
What Is Still Unclear
- The full text of the proposal has not been released, so specific rules for crypto custody are unknown.
- It is unclear which entities will qualify as qualified custodians for crypto assets.
- The SEC has not specified which outdated provisions it plans to remove.
Why This Matters for Crypto Investors
Clear custody rules could make it easier for investment advisers and companies to hold crypto assets legally. This might increase institutional participation in crypto markets, as firms would have clearer guidelines on how to protect client assets. However, until the proposal is finalized, uncertainty remains about how the rules will work in practice.
