SEC Proposes Rewrite of Crypto Custody Rules Amid Clarity Act Stall

The SEC has submitted a proposal to rewrite how investment advisers and funds hold cryptocurrency for clients. The plan, titled 'Amendments to the Custody Rules,' aims to clarify the framework for crypto custody and remove outdated provisions that no longer serve investor protection.

The rule would affect both the Investment Advisers Act and the Investment Company Act, which regulate how client assets are held. SEC Chair Paul Atkins has stated that advisers have asked how they can legally hold clients' digital assets under current rules.

The proposal is not yet public, and the Office of Information and Regulatory Affairs (OIRA) will review it before it's sent back to the SEC for a vote on whether to open it up for public comment.