SEC Revives Crypto Custody Rulemaking Amid Regulatory Uncertainty

The US Securities and Exchange Commission (SEC) has revived its efforts to create a custody rule for crypto assets, a move that could significantly impact how investment advisers handle client funds.

The SEC attempted to introduce a similar proposal in 2023 but was unable to finalize it due to operational and legal friction. The new attempt is shrouded in uncertainty, with the agency refusing to disclose details about its approach.

Custody rules determine which platforms can hold client funds, how often those assets must be audited, and whether advisers can use crypto-native infrastructure without triggering enforcement risk. A rewritten rule could redraw these lines, affecting institutions that have begun moving tokenized products into production.

The stakes are high for market participants, who may need to reassess every custodian relationship if the SEC applies the same standards to private funds, separately managed accounts, and retail products.