SEC Considers Crypto Custody Rule Updates as Blockchain Alliance Forms and Tax Lawsuits Mount

The US Securities and Exchange Commission (SEC) is considering updates to its rules for investment advisers holding digital assets. On August 25, the SEC sent a proposal to the White House regarding the custody of crypto assets on behalf of adviser clients and fund assets. The SEC's Division of Investment Management aims to improve and modernize regulations by clarifying the framework for crypto asset custody.

Meanwhile, a coalition of 39 state bankers' associations has formed the Bankchain Alliance to create an industry-owned blockchain network. This network will provide secure and modern banking services while maintaining regulatory standards, security, and customer trust. Participating financial institutions will be able to offer emerging banking capabilities such as tokenized deposits and stablecoin payments.

The Blockchain Association and the Crypto Council for Innovation have filed a complaint against Illinois's Digital Asset Tax Act, arguing that it is unconstitutional and discriminatory. The law imposes a 0.2 percent tax on digital assets exchanged, transferred, or stored through a digital-asset broker. The plaintiffs claim that this violates federal laws and state constitutional provisions.

A post-quantum security pilot has been launched by the Responsible Fintech Institute and Safeheron to test cross-regional interoperability of quantum-resistant cryptography. This initiative brings together banks and regulatory agencies to evaluate the feasibility of using post-quantum digital signatures in cross-border transactions.