SEC proposes updates to crypto custody rules for investment advisers

SEC moves forward with crypto custody rule updates

The U.S. Securities and Exchange Commission (SEC) has sent proposed changes to its custody rules for digital assets to the White House for review. This step is part of the regulatory process before the rules can be published.

The SEC said it received questions from investment advisers about how to hold crypto assets for clients while following its requirements. The proposed changes aim to clarify the rules for custody of crypto assets and update outdated provisions.

What the proposal includes

• The SEC’s proposal would clarify how investment advisers and investment companies can hold crypto assets for clients.
• It aims to remove outdated rules that no longer protect investors due to changes in market practices.
• The Office of Information and Regulatory Affairs (OIRA), part of the White House, is reviewing the proposal.

SEC’s recent crypto regulatory actions

Under Chair Paul Atkins, the SEC has made several changes to its approach to digital assets over the past year. These include:

• Guidance stating that memecoins are not securities.
• Clarifying which staking activities do not fall under securities law.
• Proposing "Regulation Crypto Assets," a new set of rules designed to help companies raise capital while protecting investors.

What is confirmed

• The SEC has sent proposed custody rule changes to the White House for review.
• The proposal aims to clarify how investment advisers can hold crypto assets for clients.
• The SEC has been updating its approach to digital assets under Chair Paul Atkins.

What is still unclear

• The exact details of the proposed rule changes have not been made public yet.
• The SEC has mentioned plans for an "innovation exemption" to fast-track crypto products, but this has not been introduced.

Why this matters for crypto investors and advisers

Custody rules determine how investment advisers can safely hold assets like Bitcoin or Ethereum for their clients. Clearer rules could make it easier for advisers to offer crypto services while following SEC requirements. This may increase access to crypto investments for more people.

Sources

• The Block
• Bloomberg