The Securities and Exchange Commission has sent a crypto custody rule proposal to the White House on August 25, targeting investment advisers and investment companies, according to a filing with the Office of Management and Budget. The move revives regulatory effort the prior administration left incomplete.
The proposal aims to establish custody standards for digital assets held by investment advisers registered with the SEC. Investment advisers currently face broad fiduciary duties under existing law but lack detailed SEC guidance on how to custody crypto safely. The rule would fill that gap with specific requirements, though the SEC has not yet disclosed the terms publicly.
The SEC attempted similar crypto custody rulemaking under the Trump administration through a proposal called the Safeguarding Proposal, which died in regulatory review. That effort targeted broker-dealers rather than advisers. The current rule, now under OMB review, focuses on the investment adviser segment after years of growth in adviser-managed crypto portfolios and client demand for exposure to digital assets.
Investment advisers have grown more active in managing crypto holdings for clients. The rule proposal addresses the custody gap after years of delay. OMB review typically lasts 60 days but can extend longer if agencies request revision.
The White House review is a procedural step before public comment. Once OMB approves it, the SEC would publish the rule in the Federal Register and open a period for public remarks, which usually runs 30 to 60 days. Industry groups and advisers will have an opportunity to challenge the rule's scope and compliance costs at that stage.
The proposal emerges as institutional crypto adoption accelerates. Custody standards are foundational for regulated entities. The rule could either accelerate adviser adoption of crypto by clarifying the path, or slow it if compliance costs prove high.
The OMB docket will show whether the rule clears White House review unchanged, faces revision, or stalls. If the SEC publishes a final rule without material changes by mid-2027, advisers will enter a compliance window typically lasting six months to one year.
