SEC Sends Revived Adviser Crypto Custody Rule Concept to White House for Review
The agenda language points to a less restrictive rewrite than the SEC’s withdrawn 2023 “qualified custodian” proposal.
The U.S. Securities and Exchange Commission has restarted work on an investment-adviser crypto custody rule by sending a new concept to the White House Office of Management and Budget for review. The agency’s regulatory agenda frames the effort as modernization and burden reduction, a notable shift in tone from the SEC’s abandoned 2023 custody expansion.
SEC Sends Adviser Crypto Custody Concept to OMB, Restarting a Shelved Rulemaking
The Securities and Exchange Commission has taken a concrete early step toward rewriting how registered investment advisers custody crypto by sending a new rule concept to the White House Office of Management and Budget for review, a pre-proposal gate that typically comes before a formal release in the Federal Register.
The Office of Management and Budget entry sits on Reginfo.gov as an “EO” review item, which is the procedural tell that staff work has moved beyond internal drafting and into the interagency lane. It does not mean the Commission has voted on a proposal, and it does not disclose the text, but it does confirm the custody effort is back in the rulemaking pipeline after the prior attempt stalled and was later withdrawn.
The SEC’s public regulatory agenda description is the other new signal. It says the forthcoming effort “would improve and modernize the regulations around custody of investment adviser client assets and fund assets, including to address crypto assets,” and it adds that the proposal would “remove burdens from certain outdated provisions that are no longer needed to provide investor protection given the evolution in the markets and security trading and holding practices.”
From Gensler’s “Qualified Custodian” Squeeze to an Atkins-Era “Modernize and Remove Burdens” Rewrite
The last time the SEC tried to solve adviser crypto custody through rulemaking, it did it by tightening the definition of where advisers could hold client assets. In February 2023, then-Chair Gary Gensler rolled out a custody expansion that would have pushed advisers toward a narrow set of “qualified custodians,” generally limited to chartered banks or trust companies, SEC-registered broker-dealers, or futures commission merchants overseen by the Commodity Futures Trading Commission.
Gensler’s posture was explicit about crypto-native venues. “Make no mistake: Based upon how crypto platforms generally operate, investment advisers cannot rely on them as qualified custodians,” he said in his 2023 statement.
That framing helped turn the proposal into a market-structure fight. Objections came from an unusually broad set of counterparties, including senior lawyers at the Small Business Administration, who warned the SEC “drastically underestimates potential impacts” that could have put smaller advisers out of business, and venture firm a16z, which called the approach “illegal, infeasible, and dangerous.” The proposal never reached final approval before Gensler left, and the SEC later pulled it, with the agency’s withdrawal page dated June 2025.
The revived effort is still thin on specifics, but the SEC’s own agenda language reads like an attempt to avoid replaying that 2023 collision. “Modernize” and “remove burdens” is not a commitment to broaden the custodian universe, and it does not answer whether crypto platforms could qualify, but it is a materially different starting point than a rule built around telling advisers what they cannot use.
October Is on the Calendar — But the Real Signal Is the Rulemaking Pipeline Momentum
The disclosure around the revived custody work points to an October timeline for a proposal, but SEC calendars are famously elastic, and the agency has already provided a recent example of slippage in its crypto agenda. A separate rulemaking, “Regulation Crypto Assets,” was initially listed for April and ultimately arrived as a proposal in August.
For traders and market participants, the nearer-term tells are procedural rather than rhetorical. First is whether the Office of Management and Budget review is marked complete on Reginfo.gov, and second is whether the SEC follows with a formal proposed rule release that actually defines which entities can serve as custodians for adviser-held crypto under the new framework.
Custody is also not moving in isolation. The SEC under Chair Paul Atkins has advanced other crypto-related items in parallel, including the proposed “Regulation Crypto Assets” rule and an agenda item to clarify crypto compliance for broker-dealers (listed under RIN 3235-AN48). The finance sector is also awaiting the agency’s promised work to clear a path for securities tokenization, which makes custody mechanics more than a crypto-only issue if tokenized funds and securities end up routed through the same adviser compliance stack.
My Take: Custody Clarity Is Becoming the Gatekeeper for RIA/Fund Crypto Access — Even Before the Text Drops
The Office of Management and Budget review is being read as a soft green light, and that’s not what the docket says. What it confirms is momentum: the SEC is actively rebuilding an adviser custody framework for crypto rather than leaving the 2023 effort dead, and that matters because custody rules are the compliance choke point that determines which venues can service registered investment advisers and funds at scale.
The threshold that matters is whether the SEC’s “modernize” and “remove burdens” language translates into an actual expansion or clarification of who can qualify as a custodian for crypto, instead of a rebranded version of the 2023 squeeze. If the proposal lands with workable custodian categories and a path advisers can operationalize, custody stops being a narrative fight and becomes a practical on-ramp for RIA and fund crypto access.
