SEC Proposes Amendments to Crypto Custody Rules for Review by White House

The SEC's amendments could set a new standard for crypto custody, influencing compliance and operational practices across the financial sector.

• On August 25, 2026, the SEC submitted proposed amendments to its custody rules to the White House for review.
• The proposal aims to modernize custody requirements for digital assets held by investment advisers and companies, diverging from previous regulatory approaches.
• Target publication date for the notice of proposed rulemaking is set for October 2026, pending OIRA review.

• Previous efforts under Gary Gensler sought to extend traditional custody rules to crypto but were withdrawn, creating uncertainty in the market.
• Current SEC Chair Paul Atkins is pursuing a deregulatory approach, responding to industry demands for clearer custody frameworks.
• Existing rules are tailored for traditional finance, leaving gaps for blockchain-based assets, which this proposal aims to address.

On August 25, 2026, the U.S. Securities and Exchange Commission (SEC) submitted its "Amendments to the Custody Rules" proposal to the White House Office of Information and Regulatory Affairs (OIRA). This submission marks a significant shift in the regulatory landscape for digital assets, as the SEC aims to modernize custody requirements specifically for investment advisers and companies dealing with cryptocurrencies. The proposal is economically significant, indicating that it could have far-reaching implications for how digital assets are managed and safeguarded.

The SEC's current initiative comes after the withdrawal of former Chair Gary Gensler's 2023 proposal, which sought to apply traditional custody rules to crypto assets but failed to gain traction. Under the leadership of Chair Paul Atkins, the SEC is now focusing on deregulation, a move that aligns with the current administration's broader economic policies. This shift is crucial as it responds to ongoing industry concerns regarding compliant custody practices for digital assets, which have been a gray area under existing regulations designed for traditional finance.

The proposed amendments are expected to clarify custody frameworks for crypto assets, potentially allowing for new practices such as self-custody, staking, and lending. By differentiating the handling of digital assets from traditional finance assets, the SEC aims to provide a more tailored regulatory environment that reflects the unique characteristics of blockchain technology. This could lead to increased institutional adoption of cryptocurrencies, as clearer guidelines may encourage more advisers and funds to engage with digital assets.

The OIRA review process allows for revisions to the proposal before it is finalized and opened for public comment. This means that the SEC is still in the early stages of shaping the final rules, and industry stakeholders are closely monitoring developments. The anticipated publication of the notice of proposed rulemaking in October 2026 will be a critical moment, as it will provide the first detailed look at the SEC's proposed changes and their implications for the crypto market.

• Investment Advisers: They will need to adapt to new custody requirements, impacting compliance and operational strategies.
• Crypto Asset Managers: Firms managing digital assets may face new guidelines that could alter their custody practices.
• Institutional Investors: Increased clarity could encourage more institutional participation in crypto markets, affecting investment flows.

• October 2026 Publication: The SEC's notice of proposed rulemaking will reveal the specifics of the custody amendments, shaping future compliance.
• Industry Reactions: Watch for feedback from investment advisers and crypto firms, as their responses could influence the final rules.
• Market Trends: Monitor how institutional adoption of crypto evolves in response to regulatory clarity, potentially impacting asset prices.