SEC advances crypto custody overhaul for advisers

TLDR

The SEC has sent a major crypto custody rule overhaul for investment advisers to the White House, moving a potentially deregulatory framework closer to public release.

1. The proposal, Amendments to the Custody Rules, is now under White House review and is tagged as economically significant and deregulatory, signaling lighter, more modern standards.
2. The rule aims to clarify how advisers and funds can custody crypto assets, likely expanding compliant options beyond traditional banks while keeping investor protection language in place.
3. Next milestones include public release, a comment period, and a final SEC vote, so the real impact will depend on the final text and industry feedback.

Deep Dive

1. What Just Happened

The SEC has submitted a proposed overhaul of custody rules for investment advisers and investment companies to the White House Office of Management and Budgets review arm, OIRA, as of August 25. Several reports confirm the package, titled Amendments to the Custody Rules, focuses explicitly on crypto assets under the Investment Advisers Act and Investment Company Act.

OMBs record labels the filing both economically significant and deregulatory, meaning it is expected to have at least a $100 million annual impact and is intended to relax, not tighten, obligations around custody. Coverage of the filing tags underscores that directional shift.

Confidence: moderate, because the labels and process are public, but the full rule text is not yet released.

2. Why It Matters For Crypto Advisers

Today, registered investment advisers generally must use qualified custodians, usually large banks or broker?dealers, and many have avoided direct crypto custody, limiting compliant exposure for clients. The SEC says this new rulemaking would clarify the framework for the custody of crypto assets for investment advisers and investment companies and remove outdated provisions that no longer fit modern trading and holding practices, including blockchain-based assets. That goal is echoed in SEC-focused summaries and crypto industry coverage.

A deregulatory classification suggests the final framework could explicitly allow more flexible custody models, such as specialist digital?asset custodians or multi?signature and multi?party computation (MPC) wallet setups that industry groups have been lobbying for.

3. What To Watch Next

The proposal text will only become public after OMBs review and an SEC commission vote to release it, followed by at least a 60?day public comment window before any final rule. Analyses of the process note that timing will depend on how many changes OMB requests and how contentious the comment period becomes.

In parallel, Congress is still debating broader market-structure legislation (the CLARITY Act), so custody rules may move ahead of a comprehensive statutory framework. For crypto users and institutions, key signals will be: whether non?bank crypto custodians are explicitly recognized, how strict the qualified custodian standard remains, and how the rule treats complex wallet arrangements.

Conclusion

The SECs move to advance a deregulatory, crypto?specific custody overhaul for advisers is a meaningful step toward clearer institutional rules, even though the exact requirements are still secret. If the final framework does broaden compliant custody options while preserving baseline safeguards, it could lower friction for regulated advisers to hold crypto, supporting deeper institutional participation and more mainstream portfolio use. The real impact will depend on the eventual rule text and how industry and regulators negotiate the details during the comment phase.