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A proposed revision to the U.S. Securities and Exchange Commission’s crypto asset custody rule entered White House review on Aug. 25. A rulemaking process that directly affects investment advisers, funds and the institutions that hold their assets has begun, blockchain media outlet CryptoSlate reported on Aug. 27 (local time).
Records from the Office of Information and Regulatory Affairs (OIRA), under the White House Office of Management and Budget, list the SEC’s “custody rule revision” as under review at the proposed rule stage. There is no statutory deadline, and publication of the actual rule text and review by the SEC commission are still pending.
The SEC’s unified regulatory agenda includes crypto in a review to change custody rules for investment adviser client assets and fund assets. The target timing for a proposed rule notice is set for October 2026, but this is only an internal agency plan, not a legal deadline.
The key issues in the revision are which entities can custody crypto and what controls and safeguards they must have. Public records do not include the actual proposed text, so it has not yet been decided how custody eligibility, internal controls and safety measures will change.
Registered investment advisers and investment companies are directly covered by the rule overhaul. Because their custody structures rely on institutions that meet federal requirements, banks and state-chartered trust companies also have a stake.
The process is a starting point for new rulemaking, not an extension of an existing proposal. The SEC withdrew the 2023 safeguarding rule proposal in June 2025 and also halted steps to finalize it as a final rule. The OIRA review is not reviving the earlier proposal but is meant to begin a new notice-and-comment process.
In the meantime, the market has treated the SEC staff’s limited position as a baseline. Staff in the SEC’s Division of Investment Management said on Sept. 30, 2025 it would not recommend enforcement if, under certain conditions, registered advisers and regulated funds treat some state-chartered trust companies as banks for crypto custody purposes.
Those conditions included licensing status, asset protection policies, audited financial statements, independent controls reports, custody agreements, risk disclosures and best-interest determinations. Custody agreements must require segregation of client or fund assets and prohibit lending, pledging collateral and rehypothecation without prior written consent. Advisers and funds must also determine whether using the custodian is in the best interests of clients, funds and shareholders.
While a no-action letter is not legally binding, it has been used as a reference in current practice by advisers, funds, banks and state-chartered trust companies. If the SEC publishes a proposed text, a full discussion is expected to begin over which entities can hold crypto and what safeguards they must provide.
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