The U.S. Securities and Exchange Commission has sent a proposal to overhaul its crypto custody rules to the White House Office of Management and Budget, a step that could reshape how investment advisers and registered funds hold digital assets for clients. The proposal reached the budget office on August 25 and its full text will not be public until the review clears, according to Bloomberg.
What the Overhaul Targets
The draft seeks to clarify the custody framework for crypto assets held by investment advisers and investment companies, a rulebook written well before digital assets became a routine part of client portfolios. It also aims to remove certain existing custody requirements that the SEC now regards as outdated because of how markets have evolved and how assets are actually traded and held. The commission has not released the specific provisions, so the precise scope of any rollback is not yet known.
Why the Timing Matters
Sending the proposal to the Office of Management and Budget is the first formal gate before a rule can move toward a commission vote. After the review, the SEC would vote to propose the rule and open a public comment period that typically runs at least 60 days. The move arrives days after the agency opened a separate comment window on its Reg Crypto proposal, a sign that custody has become one of the next fronts in the SEC’s crypto rulemaking.
A Custody Push That Extends Beyond Washington
The overhaul fits a broader regulatory effort to modernize custody standards as institutions move further into holding crypto for clients. The European Securities and Markets Authority launched its own coordinated crypto custody review under MiCA earlier this summer, and the SEC’s decision to strip out requirements it calls outdated suggests the agency sees its own rulebook as lagging the market.
What Is Still Open
For now the overhaul is a proposal, not a rule. The change would matter most to registered advisers and funds that want to custody client crypto but must wait through OMB review, an SEC vote and a comment period before anything takes effect. If the agency strips out requirements it deems outdated, it could widen the set of qualifying custodians, but that depends on language that has yet to be published and could still shift.
