Key Takeaways
- • The SEC sent proposed crypto custody rule amendments to the White House Office of Management and Budget (OMB) on August 25, 2026, marking the formal entry into executive review before public comment.
- • The filing is tagged as "economically significant" (indicating at least $100 million in annual economic impact) and positioned under the deregulatory framework of Executive Order 14192, signaling the SEC intends to loosen—not tighten—crypto custody requirements for investment advisers.
- • The proposed rule directly addresses the current custody framework that requires investment advisers to hold client crypto assets with qualified custodians (typically banks or broker-dealers), a requirement that has left advisers with few compliant options since traditional financial institutions largely avoid crypto.
- • A formal proposal is targeted for October 2026, which would trigger a public comment period; the rewrite reverses the direction of former SEC Chair Gary Gensler's 2023 Safeguarding Rule, which was withdrawn in June 2025.
- • Industry players including Andreessen Horowitz, Delphi Ventures, and Multicoin Capital have shaped the rewrite by advocating for modernized custody standards that accommodate multi-signature and multi-party computation (MPC) wallet technologies.
Summary
The SEC has advanced its crypto custody rule revision into the White House review phase, with the proposal reaching the Office of Management and Budget (OMB) on August 25, 2026. The filing, formally titled "Amendments to the Custody Rules," will determine how investment advisers and investment companies may hold and safeguard digital assets on behalf of clients. Although the full text remains confidential during the review process, OMB filing labels reveal significant policy direction.
The proposal carries two critical designations. First, it qualifies as "economically significant," a classification applied to rules with at least $100 million in annual economic impact. Second, and more importantly, the filing appears in the deregulatory column under Executive Order 14192, signed by President Donald Trump in January 2025, which directs federal agencies to rescind ten existing rules for every new regulation they introduce. These labels establish that the SEC's intent is regulatory relaxation rather than stricter compliance requirements.
The current custody framework mandates that investment advisers park client assets with a qualified custodian—typically a bank or broker-dealer. This structure has created a practical impasse for crypto-focused advisers: because most traditional custodians have avoided digital assets entirely, advisers have faced minimal compliant pathways to hold cryptocurrency for clients. The SEC's proposed amendments directly address this constraint by reconsidering what custody arrangements qualify as acceptable.
The proposed rule represents a dramatic policy reversal from the prior administration. In 2023, then-SEC Chair Gary Gensler introduced the Safeguarding Rule, which would have expanded custody duties and subjected advisers to heightened scrutiny over crypto holdings. The SEC withdrew that proposal in June 2025. The current rewrite has been shaped by industry advocacy, with venture firm Andreessen Horowitz calling for modernized crypto custody rules and law firms representing Delphi Ventures and Multicoin Capital submitting formal frameworks in December 2025 advocating for technological accommodations including multi-signature and multi-party computation (MPC) wallet arrangements.
A formal proposal release is targeted for October 2026, which will initiate the public comment period and set the stage for potential finalization before year-end. Institutional investors and digital asset managers should monitor both the October proposal details and White House feedback, as the revised custody rules will materially affect compliance costs and operational feasibility for advisers managing crypto allocations.
The proposal carries two critical designations. First, it qualifies as "economically significant," a classification applied to rules with at least $100 million in annual economic impact. Second, and more importantly, the filing appears in the deregulatory column under Executive Order 14192, signed by President Donald Trump in January 2025, which directs federal agencies to rescind ten existing rules for every new regulation they introduce. These labels establish that the SEC's intent is regulatory relaxation rather than stricter compliance requirements.
The current custody framework mandates that investment advisers park client assets with a qualified custodian—typically a bank or broker-dealer. This structure has created a practical impasse for crypto-focused advisers: because most traditional custodians have avoided digital assets entirely, advisers have faced minimal compliant pathways to hold cryptocurrency for clients. The SEC's proposed amendments directly address this constraint by reconsidering what custody arrangements qualify as acceptable.
The proposed rule represents a dramatic policy reversal from the prior administration. In 2023, then-SEC Chair Gary Gensler introduced the Safeguarding Rule, which would have expanded custody duties and subjected advisers to heightened scrutiny over crypto holdings. The SEC withdrew that proposal in June 2025. The current rewrite has been shaped by industry advocacy, with venture firm Andreessen Horowitz calling for modernized crypto custody rules and law firms representing Delphi Ventures and Multicoin Capital submitting formal frameworks in December 2025 advocating for technological accommodations including multi-signature and multi-party computation (MPC) wallet arrangements.
A formal proposal release is targeted for October 2026, which will initiate the public comment period and set the stage for potential finalization before year-end. Institutional investors and digital asset managers should monitor both the October proposal details and White House feedback, as the revised custody rules will materially affect compliance costs and operational feasibility for advisers managing crypto allocations.
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