Key Highlights
- The SEC is preparing new crypto custody rules covering investment firms and broker-dealers.
- The proposal is under White House review and still needs approval before the SEC can formally release it for public comments.
- The SEC is continuing its crypto rulemaking after the CLARITY Act failed to advance in the Senate.
The U.S. Securities and Exchange Commission (SEC) is getting closer to proposing new rules for how crypto assets are held in the United States
The rules would cover investment firms and broker-dealers, and aim to explain where they can keep crypto and how they can handle it. The proposal is now under White House review.
The timing is important because the SEC is continuing its crypto work after Congress failed to move the Digital Asset Market Clarity Act forward.
The Senate voted 49-50 on September 15 on the procedural step needed to advance the bill, falling short of the 60 votes required. The result stalled the legislation, which was meant to create a wider set of rules for the U.S. digital asset market.
But the Senate setback has not stopped the SEC from working on its own rules. On September 17, SEC Chairman Paul Atkins said the agency would continue using its existing legal powers to give investors and crypto companies more certainty.
“I have been unequivocal: with or without legislation, we will act decisively within the SEC’s statutory authority to deliver certainty for American investors and for the entrepreneurs shaping our technological future,” Atkins said.
What the new custody rules could cover
One of the SEC’s next steps is the crypto custody proposal. Custody simply refers to how an investment firm or other regulated business holds and protects assets for its customers. For crypto, this can become more complicated because the assets exist on blockchains rather than in the same way as traditional financial assets.
Taylor Lindman, chief counsel of the SEC’s Crypto Task Force, reportedly said at a CoinDesk Policy & Regulation event in Washington that the proposal is meant to help existing financial firms understand how they can work with crypto under the current system.
He said the SEC wants the market to understand “how you can carry a non-security crypto asset within a broker-dealer without needing some special registration.” The agency also wants to make clearer where investment advisers can keep client assets, including whether they can use a state-chartered trust.
Lindman said the wider goal is to make it easier for existing financial businesses to use blockchain, hold crypto and carry out crypto transactions. This would apply to crypto assets that are securities as well as those that are not.
The proposal still needs approval
However, the proposal has not become a rule yet. It first needs to be cleared by the White House Office of Management and Budget. If that happens, the SEC can formally publish the proposal and allow the public and the crypto industry to submit comments.
Until then, the SEC has already taken some steps to guide firms. Lindman pointed to a December staff statement that gave broker-dealers an interim approach for dealing with crypto custody while the formal rules are being developed.
He also referred to a September 2025 move that allowed investment advisers to use certain state-chartered trusts as qualified custodians for crypto assets.
How the new approach differs from 2023
The current effort is different from the SEC’s earlier custody push in 2023 under former Chairman Gary Gensler. That proposal never became a final rule. Under the previous approach, Gensler had said crypto firms themselves would not qualify to custody the assets.
The SEC is now working on custody as part of a wider crypto agenda. The agency has also been working on rules for crypto offerings and an exemption aimed at making it easier for platforms to offer tokenized securities.
Lindman described these efforts as “foundation laying,” meaning the SEC is working out the basic rules that can support wider use of crypto in the financial system.
“It’s the customary steps associated with taking what was once like this really unique and scary asset,” Lindman said, adding that the agency is trying to put crypto assets into a framework that can be built on in the future.
“We need to kind of meet the market where it’s at,” he said.
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