SEC Sends Crypto Custody Rule Proposal to White House Review

The US Securities and Exchange Commission (SEC) has sent its proposal for overhauling crypto custody rules to the White House Office of Information and Regulatory Affairs (OIRA) for review. The move is part of a broader effort to modernize the existing framework, which was built before the rise of cryptocurrencies.

The SEC's proposed rule aims to clarify how investment advisers and regulated funds can safely hold digital assets. Currently, the rules require client funds and securities to be maintained with qualified custodians like banks and registered broker-dealers. However, the new proposal is expected to provide clearer guidelines for crypto custody, including potential requirements around asset segregation, private-key controls, audits, recordkeeping, loss protections, internal controls, and more.

The SEC has already provided no-action relief in 2025, allowing certain state-chartered trust companies to qualify as permitted institutions for crypto custody under specified conditions. However, the new rule could provide a more durable and comprehensive framework or impose different requirements altogether, affecting specialist trust companies and digital-asset custodians.