SEC Advances Crypto Custody Rule Overhaul to White House for Review — BigGo Finance

The U.S. Securities and Exchange Commission has moved a long-anticipated overhaul of crypto custody rules into White House review, a formal step that pushes the proposal closer to public release and signals the agency’s continued shift toward rulemaking over enforcement.

The proposed amendments, submitted on Aug. 25 to the Office of Information and Regulatory Affairs (OIRA), a division of the White House Office of Management and Budget, appear in the federal regulatory agenda under RIN 3235-AN46. The submission covers potential changes to rules governing how investment advisers and investment companies safeguard client assets, including digital assets.

The proposal is listed under the title “Amendments to the Custody Rules” and would address both the Investment Advisers Act and the Investment Company Act. According to the SEC’s regulatory agenda, the agency is weighing whether to modify existing requirements or introduce new ones, with the stated goal of clearing up uncertainty around how firms can hold crypto for clients while remaining compliant with federal securities rules.

OIRA review is a standard checkpoint in the federal rulemaking pipeline, not an indication that any measure has been finalized. The White House office can request changes before sending the proposal back to the SEC, after which the commission would need to vote on whether to release it for public comment. If published, the rule would be open to comment for at least 60 days before a final vote could bring it into force.

The move comes as the broader digital asset legislative agenda remains in flux. The CLARITY market structure bill, a priority for the Trump administration’s crypto policy push, remains stalled in the Senate and is expected to face a cloture vote after lawmakers return from the August recess in September.

The custody rule overhaul reflects a broader strategic pivot at the agency since Paul Atkins became chair in 2025. Atkins has publicly committed to ending what he described as the previous “regulation through enforcement” approach, arguing that policy for digital assets should be developed through formal rulemaking instead. That shift has already been visible in the SEC’s enforcement posture: the agency dismissed several cases against major crypto companies in 2025, including its lawsuit against Coinbase.

Industry participants have been watching the custody question closely. Banks have pressed the SEC to align any new framework with existing safeguards rather than construct a separate regulatory regime. In a comment effort, the Bank Policy Institute urged the agency to apply proven custody safeguards to crypto, arguing that regulated institutions already operate under tested standards.

The custody market itself has expanded rapidly as institutions build out infrastructure for safeguarding client digital assets. Newly licensed players have entered the space, including BitGo Korea, which recently secured virtual asset service provider registration for institutional crypto custody.

The word “overhaul” suggests the SEC is weighing more than a narrow technical fix, and that prospect has drawn both optimism and caution from market participants. Supporters see an opportunity for clearer custody standards that could give institutions confidence to expand their digital asset offerings. Skeptics worry that a stricter regime could raise compliance costs for smaller custodians and create barriers to entry.

The SEC has signaled interest in this area before. In 2023, the agency advanced a broader safeguarding proposal for investment adviser assets, an effort that drew heavy industry pushback and helps explain why the current custody question remains contentious. The earlier proposal generated thousands of comment letters, with asset managers, banks, and crypto firms all raising concerns about the scope and cost of compliance.

For institutional investors, particularly investment advisers and investment firms, clarity on the rules for storing crypto assets is a foundational issue. Without a settled custody framework, many institutions have been reluctant to expand their digital asset offerings, citing regulatory uncertainty as a primary obstacle.

How much any of this affects custodians and investors depends entirely on the reviewed text and whether it is later finalized. The custody debate also sits alongside other unresolved fights over digital asset oversight, including state-level challenges such as the Illinois digital asset tax lawsuit that crypto groups are contesting.

The practical stakes today are procedural rather than immediate. The proposal must clear OIRA review, return to the SEC for a commission vote, survive a public comment period, and then secure a final vote before any new obligations would apply to custodians. Each of those stages carries its own timeline, and the text could change substantially along the way.

Still, the submission to OIRA marks the point where the SEC’s custody proposal passes from internal agency drafting into executive-level scrutiny, one of the last gates before a rule can be published. For an industry that has spent years seeking regulatory clarity, even a procedural milestone carries weight.