Key Points
- The Securities and Exchange Commission forwarded proposed crypto custody rule modifications to the White House Office of Management and Budget on August 25
- The framework aims to establish clear guidelines for investment advisers and funds managing digital assets on behalf of clients
- Details of the proposal remain confidential and may undergo revisions during the White House review process
- Under Chair Paul Atkins’ leadership beginning in 2025, the SEC has pivoted from enforcement-focused tactics to structured regulatory development
- This initiative proceeds independently as the CLARITY market structure legislation faces delays in the Senate
Federal securities regulators are moving ahead with an initiative to transform the regulatory framework governing digital asset custody by investment advisers. On August 25, the commission transmitted its proposal to the Office of Information and Regulatory Affairs, housed within the White House Office of Management and Budget, marking a critical step in the approval process.
According to the commission, investment advisers have consistently sought guidance on maintaining compliance with current regulations while handling cryptocurrency holdings. This regulatory proposal represents the agency’s response to those inquiries.
In its submission, the SEC characterized the rulemaking effort as an attempt to “clarify the framework for the custody of crypto assets for investment advisers and investment companies.” The proposal would additionally eliminate obsolete regulatory provisions that the commission considers unnecessary under modern market conditions.
The complete text of the proposal remains undisclosed to the public. During the review period, the Office of Management and Budget holds authority to recommend modifications before returning the document to the SEC. Following that review, commissioners would conduct a vote to determine whether to publish the proposal and open it for public feedback.
Regulatory Philosophy Evolves Under Chair Paul Atkins
The commission has adopted a markedly more accommodating posture toward cryptocurrency since Paul Atkins assumed the chairmanship in 2025. Atkins committed to abandoning the agency’s prior “regulation through enforcement” methodology in favor of transparent, formal rule development.
Throughout 2025, the agency withdrew multiple enforcement actions against prominent crypto companies, including its legal proceedings against Coinbase. The commission also published guidance declaring that memecoins fall outside securities classification and provided clarity regarding which staking operations exist beyond securities regulation.
In recent weeks, the SEC unveiled “Regulation Crypto Assets,” characterized as a customized offering framework designed to facilitate capital formation while maintaining investor safeguards. This initiative expanded upon collaborative guidance previously issued with the Commodity Futures Trading Commission earlier this year.
Atkins has publicly announced intentions to establish an innovation exemption mechanism to accelerate the approval process for cryptocurrency products, though specific details of that framework remain forthcoming.
Legislative Progress on the CLARITY Act
The custody rulemaking initiative advances as the CLARITY market structure legislation continues to encounter obstacles in the Senate. Observers anticipate a cloture vote on the bill when congressional members reconvene following the August recess in September.
According to Bloomberg’s reporting, the custody proposal represents one component of the SEC’s comprehensive strategy to implement the Trump administration’s digital asset policy objectives amid slow-moving congressional legislation.
The custody rule’s immediate future involves completion of White House review and subsequent return to the SEC. At that juncture, commissioners would vote on whether to release the proposal for public commentary, initiating a period allowing industry stakeholders and citizens to submit formal responses.
The commission has not announced a specific timeframe for when the commissioners’ vote might take place.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
