SEC Takes Another Shot at Crypto Custody Rules After 2023 Failure

The Securities and Exchange Commission is reviving efforts to set clear custody rules for investment advisers holding crypto assets, sending a preliminary concept to the White House Office of Management and Budget this week for review. The agency says the goal is to modernize outdated custody regulations and answer lingering industry questions about compliance.

A Rocky History With This Rule

The SEC tried something similar back in 2023 under former Chair Gary Gensler, proposing that investment advisers could only hold client crypto with a narrow group of “qualified custodians,” essentially banks, trust companies, or registered broker-dealers. That effort drew sharp pushback, including objections from the Small Business Administration and investment firm a16z, which called the plan illegal and unworkable. The proposal was eventually withdrawn without ever being finalized.

A Friendlier Approach This Time

Current SEC Chairman Paul Atkins has made crypto friendly rulemaking a central focus of his tenure, and this custody proposal fits that pattern. Since the 2023 attempt, the industry has secured a wave of new federal trust bank charters, giving more institutions the ability to handle digital assets. An October timeline has been floated for the next steps, though the agency’s past estimates have often run behind schedule.