SEC Revives Crypto Custody Rule After Failed Attempt

TLDR

• The SEC is preparing a new crypto custody rule for investment advisers and fund assets.
• The proposal has been sent to the White House Office of Management and Budget for review.
• The SEC wants to modernize custody requirements and clarify how firms should safeguard client crypto assets.
• The effort follows the agency’s failed 2023 custody proposal under former Chair Gary Gensler.
• SEC Chair Paul Atkins has taken a more crypto-friendly regulatory approach since taking office.

The U.S. Securities and Exchange Commission is preparing another attempt to update rules for firms holding client assets. The planned crypto custody rule aims to explain how advisers and funds can safeguard digital assets under existing custody requirements.

The SEC has sent the concept to the White House Office of Management and Budget for review. The agency says the proposal would modernize custody rules, address crypto assets, and remove older requirements that no longer fit current trading practices.

SEC Returns to Crypto Custody Rule

The new effort follows a failed 2023 proposal under former SEC Chair Gary Gensler. That plan sought to limit advisers to qualified custodians, including chartered banks, trust companies, registered broker-dealers, and regulated futures firms.

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