The U.S. Securities and Exchange Commission has sent its crypto custody proposal to the White House for review. The plan would address how investment advisers and investment companies may hold digital assets under existing federal rules, a detail that matters for firms that already manage crypto exposure inside regulated products.

The Office of Information and Regulatory Affairs received the proposal on Aug. 25. The office is part of the White House Office of Management and Budget. The proposal is still under review, and the SEC has not yet released the full text.

JUST IN: 🇺🇸 SEC submits proposal for new rules to modernize crypto custody regulations. On August 25, the SEC sent a draft crypto custody rule to the Office of Management and Budget for review. Filed as RIN 3235-AN46, "Amendments to the Custody Rules." What it does: clarifies… pic.twitter.com/o4wBG9DxSf — Crypto Patel (@CryptoPatel) August 26, 2026

JUST IN: 🇺🇸 SEC submits proposal for new rules to modernize crypto custody regulations. On August 25, the SEC sent a draft crypto custody rule to the Office of Management and Budget for review. Filed as RIN 3235-AN46, "Amendments to the Custody Rules." What it does: clarifies… pic.twitter.com/o4wBG9DxSf

SEC Targets Crypto Custody Rules

The proposed changes would amend provisions of the Investment Advisers Act of 1940 and the Investment Company Act of 1940.

The SEC said the industry has raised questions about crypto custody, and that existing regulatory guidance is outdated because of the growth of cryptocurrencies in regulated investment vehicles. That backdrop helps explain why the agency is revisiting custody language now: advisers and funds need clearer rules before they can know which asset-holding arrangements satisfy federal requirements.

Under the Investment Advisers Act of 1940, registered advisers generally must keep clients’ funds and securities with a qualified custodian, subject to certain exemptions. Crypto custody raises distinct issues because, in some cases, it depends on private keys and blockchain technology.

The SEC said it wants to clarify how those rules apply to digital assets. It also plans to revise certain other requirements for client and fund assets. In addition, the agency may remove provisions that have become obsolete as market practices have changed and new asset-holding methods have emerged.

New Proposal Follows Earlier Withdrawal

The latest custody effort follows an internal policy shift at the SEC. On June 12, 2025, the agency rescinded its Safeguarding Advisory Client Assets proposal.

That earlier proposal was intended to broaden custody rules to cover more client assets, including crypto assets. It also would have required all covered assets to be held by qualified custodians.

The move drew controversy in the crypto sector because most digital asset custodians did not meet the proposed definition of a qualified custodian.

The SEC later said it had rescinded the proposal and that any further action would require the commission to begin the rulemaking process again from the start. The new move is part of a separate effort led by SEC Chairman Paul Atkins.

Crypto Regulation Remains on SEC Agenda

The custody rule is one of several crypto-related proposals on the SEC’s agenda. The agency has also outlined plans involving digital assets, broker-dealers, and market structure. Other possible rules could address exemptions and safe harbor provisions for crypto entities.

The SEC is also considering proposals related to crypto trading on regulated platforms and tokens. Separately, Congress is weighing crypto market structure legislation, which would also address the division of jurisdiction between the SEC and the Commodity Futures Trading Commission over crypto assets.

The SEC can move forward with crypto custody rules for registered investment advisers under its existing statutory authority, meaning it does not need to wait for broader market structure legislation before proceeding.

Before the rule can advance, it must first complete the White House review process. After that, the SEC can publish the proposal and open a public comment period, giving investment advisers, custodians, investment companies, and crypto businesses a formal chance to weigh in. The agency could revise the proposal after reviewing comments, and final approval would require another commission vote.

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