SEC Moves Forward With Overhaul of Crypto Custody Rules for Investment Advisers

TL;DR

• The SEC sent the White House regulatory office a proposal to reform crypto asset custody rules for investment advisers.
• The proposal modifies rules under the Investment Advisers Act and the Investment Company Act to clarify how digital assets must be custodied.
• The shift in approach came once Paul Atkins took over as SEC chair in 2025, abandoning regulation through enforcement actions.

The SEC sent the Office of Information and Regulatory Affairs (OIRA), an arm of the White House Office of Management and Budget, a proposal to reform the custody rules for digital assets applicable to investment advisers and investment funds. The initiative seeks to provide greater clarity to institutions on how they can hold crypto assets on behalf of their clients within the framework of federal securities rules.

According to the agency’s regulatory agenda, the contemplated changes would affect existing rules or introduce new provisions under the Investment Advisers Act and the Investment Company Act. The goal is to eliminate uncertainty about how firms can custody cryptocurrencies for their clients without violating current regulations. The proposal has not yet been made public: OIRA may request modifications before returning it to the regulator, which would then vote on whether to open it for public comment.

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