SEC Sends Proposal to White House to Overhaul Crypto Custody Rules for Investment Firms - CoinGape

The U.S. Securities and Exchange Commission (SEC) has reportedly sent a proposal to the White House to update the custody rules that govern how investment firms hold and safeguard client crypto assets. This transmittal to the Office of Management and Budget is a formal step in the federal rulemaking process, allowing for economic impact review before the proposal is publicly released.

Current custody rules were drafted before digital assets became mainstream, leaving ambiguity around key management, private key verification, and asset segregation. If the proposal moves forward, it could provide clearer compliance standards for registered investment advisers, ultimately strengthening investor protections while addressing how these firms account for and safeguard digital holdings.

For the broader market, improved regulatory clarity on custody is often seen as a prerequisite for deeper institutional participation. A definitive framework may encourage more advisers to offer crypto exposure while reducing the legal risks associated with safeguarding digital assets. Market participants will now be watching for the official publication, the ensuing public comment period, and whether the final version preserves any flexibility for both large and small firms. The timeline and final scope, however, remain uncertain and subject to change.