SEC Sends Revised Crypto Custody Rule to White House, Flagging a Deregulatory Turn

The Securities and Exchange Commission has transmitted a rewrite of its crypto custody rule to the White House for review, according to a filing posted Tuesday. The text itself remains nonpublic, but the filing metadata points clearly to the agency's intent. The proposal, titled "Amendments to the Custody Rules," arrived at the Office of Management and Budget (OMB) on August 25. It addresses how investment advisers are permitted to custody clients' crypto assets. The OMB entry carries two notable designations. One flags the rule as "economically significant," a category generally reserved for measures expected to have at least $100 million in annual economic impact. More telling, the filing is placed in the "deregulatory" category under Executive Order 14192, signed by President Donald Trump in January 2025, which directs agencies to eliminate ten existing rules for every new one issued. Even without the text, the public record signals the SEC is moving to reduce, not expand, crypto custody obligations. The agenda abstract adds that the effort explicitly covers crypto assets and targets a formal proposal in October, a step that would trigger a public comment period. The shift follows a multi-year debate over how advisers can comply with custody requirements when dealing with crypto. Under the current framework, advisers typically must place client assets with a qualified custodian, most often a bank or broker-dealer. Because few such firms have been willing to custody crypto, advisers have faced limited compliant options. Under former Chair Gary Gensler, the SEC pursued a stricter approach. The 2023 "Safeguarding Rule" would have expanded custody duties, and SEC staff also scrutinized advisers' custody practices. The agency withdrew that plan in June 2025. Industry input has since helped shape the rewrite. Andreessen Horowitz urged the SEC to update custody rules for crypto. In December 2025, attorneys representing Delphi Ventures and Multicoin Capital submitted a custody framework requesting flexibility to use multisignature and multiparty computation (MPC) wallets, structures designed to split key control so that no single party can move assets unilaterally. The custody filing comes one week after the SEC proposed "Regulation Crypto Assets," a framework focused on token fundraising. Together, the two proposals span issuance and institutional holding. In an August 18 statement, SEC Chairman Paul Atkins said Regulation Crypto Assets is intended to provide "clear pathways to raise capital under the federal securities laws" as the Commission seeks greater clarity for crypto markets while Congress works on a lasting framework. On Capitol Hill, progress remains uncertain. The House passed the Clarity Act 294134 in July 2025, a bill that would divide oversight of crypto between the SEC and the Commodity Futures Trading Commission (CFTC). The legislation has been stalled in the Senate and faces a 60-vote hurdle around September 15, with its prospects still unclear. The SEC appears unwilling to wait for that outcome. Market watchers are now focused on two near-term indicators: how long OMB keeps the custody rewrite under review, and which firms seek meetings while the proposal text remains sealed.