US SEC Crypto Custody Rules Take Key Step Forward, Proposal Under White House Review
The U.S. Securities and Exchange Commission (SEC) has moved its proposed rules for crypto asset custody into a critical phase. The proposal has been formally submitted to the White House Office of Management and Budget (OMB) for review, signaling progress toward establishing clearer regulatory pathways for financial institutions dealing with digital assets.
Clarity for Broker-Dealers and Investment Advisers
As outlined by Taylor Lindman, Chief Legal Advisor of the SEC's Crypto Working Group, the proposed rules aim to address two primary areas of uncertainty for traditional financial intermediaries.
- For Broker-Dealers: The rules seek to clarify the circumstances under which they can hold crypto assets that are not deemed securities without needing a special-purpose registration.
- For Investment Advisers: The proposal would explicitly permit advisers to custody client crypto assets with qualified custodians, with state-chartered trust companies highlighted as a potential compliant option.
This framework is designed to give existing securities firms and market participants greater confidence in utilizing blockchain technology and engaging with crypto assets.
Building the Foundation: Interim Measures and Related Efforts
Lindman described the SEC's recent work as "laying the groundwork." Prior to this proposal, the agency has issued interim guidance to bridge the regulatory gap.
In September 2025, the SEC staff issued a statement allowing investment advisers, under certain conditions, to use state-chartered trust companies for crypto custody. This provided a temporary operational solution for the industry.
These custody efforts are part of a broader suite of regulatory initiatives from the SEC, including proposed rules for crypto asset offerings and exemptions for certain tokenized securities. Together, they represent a concerted push to create a more structured environment for digital assets within the traditional financial system.
Next Steps and Regulatory Context
The OMB review focuses on assessing the proposal's potential economic impact and administrative burden. Upon completion, the SEC will publish the official proposal, triggering a standard public comment period where industry and public feedback will be solicited.
This move marks a significant shift from the SEC's posture in 2023, when a previous attempt at crypto custody rules under former Chairman Gary Gensler was ultimately abandoned. The advancement of this proposal under new leadership is widely interpreted as a move toward a more pragmatic and potentially industry-engaged regulatory approach.
The progression of these custody rules to the White House review stage represents the most substantial step in years toward a formal U.S. regulatory framework for crypto custody, with major implications for institutional adoption.