The Securities and Exchange Commission's proposed rewrite of crypto custody rules for investment advisers and funds officially entered White House review on Aug. 25. The regulatory action initiates an active pre-publication review for a proposal that will impact advisers, investment companies, and the financial institutions holding their digital assets.
According to the Office of Information and Regulatory Affairs (OIRA) record, the SEC's "Amendments to the Custody Rules" are currently listed as pending at the proposed-rule stage without a formal legal deadline. OIRA handles the coordination of Executive Branch reviews for significant draft regulations prior to their publication by the agency. While the receipt moves the rulemaking process forward, formal Commission consideration and publication are still pending.
The Unified Agenda indicates that the SEC is reviewing potential changes regarding both investment adviser client assets and fund assets, including cryptocurrency. An agency planning target lists October 2026 for a notice of proposed rulemaking, though the OIRA record notes no binding legal deadline.
Registered investment advisers and investment companies are directly affected by the proceedings. Because their custody arrangements depend on institutions that satisfy federal requirements, the rules also implicate commercial stakes for banks and state trust companies. Published records have not revealed operative proposal language, leaving details regarding eligibility, controls, and safeguards unresolved.
This proceeding follows a prior regulatory shift. In June 2025, the SEC withdrew its 2023 safeguarding proposal, terminating the path to a final rule under that initiative and indicating that future action would require a fresh proposal. Consequently, the draft currently at OIRA initiates a new rulemaking path rather than reinstating the previous measure's requirements.
In the interim, a staff position has influenced market operations. On Sept. 30, 2025, SEC investment-management staff stated they would not recommend enforcement action against registered advisers or regulated funds utilizing specific state trust companies as banks for crypto custody, provided certain conditions were satisfied.
These conditions encompass authorization, safeguarding policies, audited financial statements, independent control reports, custody agreements, risk disclosures, and best-interest determinations. Additionally, custody contracts must segregate client or fund assets while prohibiting lending, pledging, or rehypothecation without prior written consent. Advisers and funds are also required to disclose material risks and confirm that utilizing the custodian aligns with the best interests of clients, funds, and shareholders.
Although the staff no-action position lacks legal force, it functions as the practical baseline currently utilized by advisers, funds, banks, and state trust companies. The transition of the SEC crypto custody rewrite into an active rulemaking phase means the eventual release of the proposal will shift the current process signal into a substantive debate regarding institutional eligibility and required safeguards for crypto custody.
