The SEC Just Sent Its Crypto Custody Rule Rewrite to the White House - Startup Fortune

The SEC has sent its long-awaited crypto custody rule rewrite to the White House Office of Management and Budget for final review. This is a standard but significant step in the federal rulemaking process, indicating that the Commission has finished internal deliberations and is one step closer to publishing a final rule.

The update is expected to modernize existing custody requirements under the Investment Advisers Act, which were designed primarily for traditional securities like stocks and bonds. Digital assets raise unique questions—such as who holds private keys and what qualifies as a qualified custodian. A clearer federal standard could give institutional investors more confidence in how advisers safeguard crypto holdings.

Market participants should watch the final text for how the rule defines custody, whether it permits certain types of custodians, and what compliance timeline is provided. While the headline is procedural, the outcome could influence how broadly traditional financial firms integrate digital assets into their offerings. The rule still needs to be published in the Federal Register and typically becomes effective after a period.