The U.S. Securities and Exchange Commission (SEC) has sent a proposed rule on crypto custody by investment advisers to the White House for review, advancing another piece of the agency’s digital-asset rulemaking agenda.
According to a Bloomberg report published on Wednesday, the proposal was submitted to the Office of Management and Budget (OMB) on August 25, according to a federal regulatory filing. The SEC said the rule would clarify how investment advisers and investment companies can custody crypto assets for clients while removing some requirements it considers outdated.
The proposal has not yet been made public. The Office of Management and Budget’s review must be completed before the SEC can publish the proposal and seek public comment.
Proposal targets crypto custody rules
The SEC’s description says the rule would establish a clearer framework for advisers and investment companies holding digital assets on behalf of clients. The agency said investment firms have raised questions about how existing custody requirements apply to crypto assets and how they can hold those assets while complying with SEC rules.
The proposal would also remove certain custody provisions that the SEC says no longer reflect changes in financial markets or current practices for holding and trading assets. The agency has linked the work to Chairman Paul Atkins’ broader effort to update its regulatory framework for digital assets.
White House review comes before SEC vote
The proposal’s submission to the Office of Management and Budget is an early step in the federal rulemaking process. OMB will review the proposal before returning it to the SEC. The agency could make changes during that process. The three-member SEC would then need to vote on whether to formally release the proposal.
If approved, the SEC would publish the rule for public comment. The comment period would generally run for at least 60 days, after which the agency would consider the responses before deciding whether to adopt a final rule. A final rule would require another SEC vote before taking effect.
The process means the proposal is not yet a binding change to crypto custody requirements.
Crypto rules advance as Congress remains stalled
The custody proposal comes as the SEC continues developing crypto-specific rules while Congress works on broader legislation governing the digital-asset market.
The Senate’s consideration of the CLARITY Act remains a key part of the debate over how regulatory responsibilities should be divided between the SEC and the Commodity Futures Trading Commission (CFTC).
The SEC has pursued several rulemaking initiatives as lawmakers work on that legislation, leaving the agency to address some issues within its existing authority.
SEC also delayed Regulation Crypto meeting
The latest custody filing follows the SEC’s decision earlier this month to postpone a scheduled open meeting at which commissioners were expected to consider a separate crypto rulemaking proposal.
The August 14 meeting was canceled a day before it was scheduled. The SEC said at the time that an unforeseen scheduling issue required the meeting to be moved and that it would be rescheduled for a later date.
The meeting was expected to address the proposal known as Regulation Crypto, a separate framework covering certain crypto assets offered or sold as part of investment contracts.
That proposal is distinct from the custody rule now under OMB review.
Details of custody framework remain pending
The SEC’s filing provides only a description of the proposed custody rule, leaving important details unavailable until the proposal is released publicly.
Those details will determine which crypto assets and custody arrangements fall within the framework, what requirements would be removed or modified, and how advisers would be expected to safeguard client assets.
For now, the OMB review marks the next formal step in the SEC’s effort to revise its approach to crypto custody.
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