SEC crypto custody rewrite enters White House review with key rules still undisclosed
The SEC crypto custody rewrite for funding advisers and funds, together with their crypto belongings, entered White House review on Aug. 25. The transfer begins an energetic pre-publication review of an economically vital proposal with direct penalties for advisers, funding firms and the establishments that maintain their belongings.
The Office of Information and Regulatory Affairs record lists the SEC’s “Amendments to the Custody Rules” as pending on the proposed-rule stage, with no authorized deadline. OIRA coordinates Executive Branch review of serious draft rules earlier than an company publishes them. The receipt advances the rulemaking course of; publication and Commission consideration still lie forward.
The Unified Agenda entry says the SEC is contemplating modifications for funding adviser shopper belongings and fund belongings, together with crypto. It lists October 2026 because the goal for a discover of proposed rulemaking. That date is an company planning goal, whereas the OIRA report lists no authorized deadline.
Registered funding advisers and funding firms sit closest to the rulemaking. Their custody preparations depend on establishments that meet federal necessities, bringing banks and state belief firms into the industrial stakes. The printed data present no operative proposal language, leaving the course of any modifications to eligibility, controls, or safeguards unresolved.
The continuing follows a regulatory reset. In June 2025, the SEC withdrew its 2023 safeguarding proposal, ended the trail to a remaining rule from that measure, and stated future motion would require a brand new proposal. The draft now at OIRA due to this fact begins a brand new rulemaking moderately than reviving the sooner proposal’s necessities.
A extra restricted employees place has formed the market within the meantime. On Sept. 30, 2025, SEC investment-management employees stated they might not advocate enforcement in opposition to registered advisers or regulated funds that handled sure state belief firms as banks for crypto custody when specified conditions had been met.
Those circumstances cowl authorization, safeguarding insurance policies, audited monetary statements, impartial management stories, custody contracts, danger disclosures and best-interest determinations. The custody settlement should segregate shopper or fund belongings and bar lending, pledging or rehypothecation with out prior written consent. Advisers or funds should additionally disclose materials dangers and decide that utilizing the custodian serves the very best pursuits of shoppers, funds and their shareholders.
The no-action letter is a employees enforcement place with no authorized drive, however it gives the sensible baseline that advisers, funds, banks, and state belief firms use at this time. The SEC crypto custody rewrite places that baseline into an energetic rulemaking body. Release of the SEC’s proposal will flip the present course of sign right into a substantive debate over which establishments might custody crypto belongings and the safeguards they have to present.
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