SEC sends crypto custody rule concept to White House for review

The Securities and Exchange Commission is advancing a fresh draft on crypto custody. CoinDesk reported that the regulator forwarded the outline to the White House Office of Budget and Management this week, a precursor to a formal rulemaking.

According to the SEC’s public regulatory agenda, the plan aims to update standards for holding client and fund assets, including digital currencies. The document indicates the changes would also shed requirements deemed obsolete, as market and trading practices have shifted since previous safeguards were established.

The predecessor to this effort stalled in 2023. That draft mandated that investment firms store client cryptocurrency with approved custodians, a list that included chartered banks, trust companies, registered broker-dealers, and futures commission merchants. Officials at the Small Business Administration advised the commission that the initial proposal severely miscalculated the financial strain such requirements would place on smaller advisory firms.

Following that setback, the digital asset sector has secured a rise in new federal trust bank licenses, allowing additional financial entities to manage crypto holdings. Current SEC leadership has emphasized supportive crypto policies. The agency is indicating an October timeline for the formal release of the custody proposal.