Key Takeaways
- • The SEC submitted its "Amendments to the Custody Rules" proposal to the White House Office of Information and Regulatory Affairs (OIRA) on August 25, 2026, advancing independent crypto custody regulation while legislative efforts stall in Congress.
- • The custody rule rewrite targets the Investment Advisers Act and Investment Company Act to clarify how investment advisers and funds legally hold digital assets for clients, addressing repeated inquiries from industry participants on current regulatory compliance.
- • The CLARITY Act, a Senate market-structure bill intended to establish comprehensive crypto regulation, faces delays until September due to Democratic objections to the latest draft, pushing a cloture vote to after the congressional recess despite President Trump's pro-crypto campaign platform and calls for completion.
- • CFTC Chairman Michael Selig committed to finalizing derivatives rules independently before the administration's term ends, signaling regulatory momentum through executive agency action rather than legislation.
- • The SEC dropped its enforcement case against Coinbase in 2025, marking a strategic shift in the agency's crypto regulatory approach under Chair Paul Atkins.
Summary
The SEC is advancing crypto custody regulation through independent rulemaking while legislative efforts in Congress remain deadlocked. On August 25, 2026, the agency submitted its "Amendments to the Custody Rules" proposal to the White House Office of Information and Regulatory Affairs (OIRA) for review—a critical step before public comment and formal agency action. The rule directly addresses investor adviser and investment company custody frameworks under the Investment Advisers Act and Investment Company Act, two foundational statutes governing how client assets are held. According to the SEC, the rewrite will "clarify the framework for the custody of crypto assets" and eliminate "outdated provisions" that no longer align with investor protection objectives.
The submission reflects mounting practical pressure within the industry. Investment advisers have repeatedly sought clarity on complying with existing custody rules when holding digital assets for clients, creating regulatory uncertainty that the SEC's rule targets. This executive action contrasts sharply with stalled legislative efforts. The CLARITY Act, a Senate-backed market-structure bill intended to establish comprehensive crypto regulation, has encountered Democratic objections to its latest draft, pushing the scheduled August vote to September. Some Republicans, including Senator Cynthia Lummis, accused unnamed colleagues of deliberately obstructing the measure. President Trump, who campaigned on a pro-crypto platform, publicly called on lawmakers to complete the bill last week, and SEC Chair Paul Atkins stated he remains "committed to supporting Congress in advancing" it.
Regulatory momentum continues independent of legislative outcomes. CFTC Chairman Michael Selig indicated that derivatives rules will be finalized before the administration's term expires, with or without CLARITY's passage. This two-track approach—concurrent SEC and CFTC rulemaking alongside stalled congressional action—signals the administration's determination to progress crypto regulation through administrative channels. The broader context includes the SEC's 2025 dismissal of its enforcement case against Coinbase, marking a substantive reorientation of agency enforcement posture under current leadership.
The submission reflects mounting practical pressure within the industry. Investment advisers have repeatedly sought clarity on complying with existing custody rules when holding digital assets for clients, creating regulatory uncertainty that the SEC's rule targets. This executive action contrasts sharply with stalled legislative efforts. The CLARITY Act, a Senate-backed market-structure bill intended to establish comprehensive crypto regulation, has encountered Democratic objections to its latest draft, pushing the scheduled August vote to September. Some Republicans, including Senator Cynthia Lummis, accused unnamed colleagues of deliberately obstructing the measure. President Trump, who campaigned on a pro-crypto platform, publicly called on lawmakers to complete the bill last week, and SEC Chair Paul Atkins stated he remains "committed to supporting Congress in advancing" it.
Regulatory momentum continues independent of legislative outcomes. CFTC Chairman Michael Selig indicated that derivatives rules will be finalized before the administration's term expires, with or without CLARITY's passage. This two-track approach—concurrent SEC and CFTC rulemaking alongside stalled congressional action—signals the administration's determination to progress crypto regulation through administrative channels. The broader context includes the SEC's 2025 dismissal of its enforcement case against Coinbase, marking a substantive reorientation of agency enforcement posture under current leadership.
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