The U.S. Securities and Exchange Commission has submitted a proposal to update custody rules to the White House's Office of Information and Regulatory Affairs for review. The filing, labeled "economically significant," targets publication of the proposed rule in October 2026.
The proposal, titled "Amendments to the Custody Rules," represents a significant rewrite of current regulations. It aims to differentiate how traditional finance assets are held by custodians from how digital assets are managed. The SEC currently maintains custody standards for traditional assets through "qualified custodians," which include registered brokers, banks, and state-chartered trust companies.
Updated Rules for Digital Assets
The SEC's new rulemaking is intended to modernize custody provisions for investment advisers and investment companies to account for digital assets. Current regulations designed for traditional finance have created confusion about what constitutes a qualified custodian for blockchain assets.
The latest draft differs significantly from former SEC Chair Gary Gensler's 2023 proposal, which was never finalized. Under current Chair Paul Atkins, the SEC formally withdrew Gensler's approach and determined that a new proposal was necessary.
Potential Regulatory Changes
If adopted, the proposal could affect how advisors and custodians handle several areas, including:
- Self-custody arrangements
- Multi-signature arrangements
- Staking activities
- Lending activities
- Decentralized finance operations
The SEC and White House review could also clarify how independent verification for blockchain projects would work and the scope of examinations. The October 2026 deadline is not final and may shift as the review process continues.
