SEC Revives Crypto Custody Rule Proposal for Investment Advisers

The U.S. Securities and Exchange Commission (SEC) is reviving its plan to update rules for firms holding client assets, specifically focusing on crypto custody. The proposed rule aims to modernize custody requirements and clarify how advisers and funds can safeguard digital assets under existing custody standards.

The SEC's new effort follows a failed 2023 proposal under former Chair Gary Gensler, which drew objections from financial companies, crypto firms, and officials. Current SEC Chair Paul Atkins has taken a more crypto-friendly regulatory approach since taking office, focusing on giving market participants routes for issuing, trading, and holding digital assets in the United States.

The market has changed since 2023, with more crypto companies securing federal trust bank charters, expanding the number of institutions that may qualify to safeguard digital assets. This shift could give advisers more custody choices under a new framework.