SEC Custody Rule Rewrite for Crypto Enters White House Review
The U.S. Securities and Exchange Commission has sent a rewritten custody rule proposal to White House review as of Aug. 25, according to The Defiant. The proposal covers investment advisers and investment companies and is designed to clarify how digital assets should be treated under custody requirements.
The new framework follows the withdrawal of a separate custody rule proposal that the SEC had put forward in 2023. That earlier proposal drew criticism from parts of the crypto industry over how it would have applied to digital-asset custody arrangements, according to The Defiant.
Entry into White House review, typically conducted by the Office of Information and Regulatory Affairs, is a standard step in the U.S. federal rulemaking process that precedes formal publication of a proposed rule for public comment. The Defiant reported that the review marks a step forward for the SEC’s efforts to establish clearer standards for how advisers and funds holding crypto assets must safeguard client holdings.
Custody rules are a central regulatory concern in digital assets because they govern how third parties, including exchanges, banks, and specialized custodians, hold and protect client crypto holdings from loss, theft, or misuse. Clearer federal standards could affect how investment advisers and funds structure their crypto holdings and which custodians they are permitted to use.
The Defiant did not provide additional detail on the specific provisions of the new rule text or a timeline for when it might be released for public comment. Further specifics are expected to emerge as the White House review process proceeds.
Based on reporting by thedefiant.io.
