Breaking: SEC Sends Crypto Custody Rule Overhaul to White House for Interagency Review

WASHINGTON — The Securities and Exchange Commission has submitted a proposed overhaul of its digital asset custody requirements to the White House Office of Information and Regulatory Affairs (OIRA), the final interagency checkpoint before a rule can be formally published. The rulemaking targets how registered investment advisers and registered investment companies may hold crypto assets on behalf of clients.

OIRA review is required for significant rules under Executive Order 12866. The step is procedural but meaningful: it signals that the Commission has completed an internal draft and is moving toward publication in the Federal Register. Rule text is not public while a submission sits at OIRA, and review periods can run 90 days or longer.

The rulemaking is expected to implicate Rule 206(4)-2 under the Investment Advisers Act of 1940 — the “Custody Rule” — which requires advisers with custody of client funds or securities to maintain those assets with a “qualified custodian,” a category limited to banks, registered broker-dealers, futures commission merchants, and certain foreign financial institutions. Whether crypto-native custodians and state-chartered trust companies satisfy that definition has been unresolved since the Commission’s February 2023 “Safeguarding Advisory Client Assets” proposal, which drew heavy industry opposition and was never finalized.

Implications: A revised custody framework would directly affect US registered investment advisers holding spot digital assets, crypto custody providers seeking qualified custodian status, and sponsors of digital asset funds and ETFs whose custody arrangements have operated without clear rule-level guidance. Advisers that currently avoid direct crypto exposure because of custody uncertainty may gain a defined compliance path; existing custodians could face new segregation, recordkeeping, or examination requirements depending on the final text.

What’s next: The rule text becomes public when OIRA concludes review and the SEC publishes the proposal in the Federal Register, which will open a public comment period. CryptoLaw.blog will report the substantive terms once the document is released.

This content is for informational purposes only and does not constitute legal advice. Consult with a qualified US attorney for guidance specific to your situation.