According to Bloomberg, the U.S. SEC submitted a new proposal to the Office of Management and Budget (OMB) on August 25, aimed at establishing a new custodial rules framework for investment advisors and investment companies holding client digital assets.

The proposal will clarify the custodial framework for crypto assets, addressing previous questions from investment companies and advisors about how to hold digital assets for clients without violating regulatory requirements. It will also eliminate certain existing custodial requirements that the SEC considers outdated due to market evolution and current trading practices.

The SEC stated that the proposal is part of Chairman Paul Atkins’ efforts to modernize the regulatory framework. The complete details of the proposal will be made public after the OMB completes its review, after which it will be returned to the SEC, possibly with suggested modifications, and then voted on by a committee currently composed of three Republicans, before being announced publicly. As a matter of course, the SEC typically seeks at least 60 days of public comment before finalizing the proposal, followed by another vote for it to take effect.