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The Securities and Exchange Commission has sent its planned overhaul of investment custody rules for White House regulatory review, advancing a new proposal that would address how advisers and investment companies hold crypto assets.
The Office of Management and Budget received the rulemaking on August 25. The SEC’s regulatory agenda describes the project as an effort to modernize custody requirements for advisory client and fund assets, including crypto.
OIRA Review Advances Custody Proposal Toward SEC Vote
The rulemaking, titled Amendments to the Custody Rules, remains at the proposed-rule stage. The SEC’s agenda says its Division of Investment Management is considering recommending new or amended rules to the Commission.
The agenda targets October for a notice of proposed rulemaking, but that timetable is not binding. Completing OIRA review would not itself put the rule into effect or guarantee publication. The Commission would still need to approve a proposal before opening it for public comment.
The text under review has not been published. It therefore does not yet reveal which crypto custody arrangements could qualify, whether alternative safeguarding structures would be permitted or how the SEC might address self-custody.
SEC Says Crypto Custody Rules Need Clarification
The SEC says investment advisers and investment companies have raised questions about how to hold crypto assets while complying with existing custody requirements.
Its current rulemaking plan covers both advisory client assets and investment fund assets. The agency also says it wants to modernize provisions that are no longer necessary given changes in securities trading and holding practices. The project is designated as deregulatory on the 2026 Unified Agenda.
The review follows limited no-action relief granted by SEC staff to Franklin Templeton on August 12. That letter applies to a specific arrangement allowing registered Franklin funds to hold shares of the Franklin On-Chain U.S. Government Money Fund using a blockchain-integrated recordkeeping system without complying with specified physical-custody provisions of Rule 17f-2, subject to safeguards.
New Proposal Replaces Withdrawn 2023 Safeguarding Plan
The SEC proposed its Safeguarding Advisory Client Assets rule in February 2023 under former Chair Gary Gensler. It would have expanded the adviser custody framework to all client assets and imposed additional qualified-custodian requirements, including for crypto.
The Commission formally withdrew that proposal in June 2025 and said any future regulatory action in the area would begin with a new suggested rule.
The August 25 submission is part of that new rulemaking effort, not a revival of the withdrawn text. The immediate next steps are completion of regulatory review and, if the Commission approves the proposal, publication for public comment.
