Hassan Maishera
TL;DR
-
The SEC has sent proposed changes to its digital asset custody rules to the White House for regulatory review.
-
The proposal seeks to clarify how investment advisers and investment companies can hold cryptocurrency for clients.
-
It would also modernize outdated custody provisions while retaining investor protections.
-
The initiative forms part of SEC Chair Paul Atkins’ broader effort to reshape US cryptocurrency regulation.
The US Securities and Exchange Commission has sent a proposal to overhaul its cryptocurrency custody rules to the White House for review.
The proposal is now under consideration by the Office of Information and Regulatory Affairs, a division of the Office of Management and Budget that reviews federal regulations before they are formally published.
SEC Seeks Clarity for Investment Advisers Holding Crypto
The SEC said it has received questions from investment advisers about how they can custody digital assets for clients while complying with existing regulatory requirements.
The proposed rulemaking would clarify the custody framework applying to crypto assets held by investment advisers and investment companies.
It would also modernize certain provisions that the agency considers outdated or unnecessarily burdensome following changes in financial markets, securities trading and asset-holding practices.
The SEC said its goal is to remove unnecessary requirements without weakening investor protections.
Review by the Office of Information and Regulatory Affairs is an important step in the federal rulemaking process.
The office evaluates proposed regulations before publication, including their potential economic effects and consistency with the administration’s policy priorities.
The proposal’s submission does not mean the changes have taken effect. The SEC would still need to formally publish the rulemaking and complete the applicable regulatory process before adopting a final version.
SEC Accelerates Crypto Regulatory Overhaul
The custody proposal forms part of a wider shift in digital asset policy under SEC Chair Paul Atkins.
Over the past year, the agency has published guidance clarifying its position on several areas of the cryptocurrency market. This includes its view that memecoins are generally not securities and its explanation of which staking activities may fall outside federal securities laws.
The SEC has also worked with the Commodity Futures Trading Commission to clarify how existing laws apply to digital assets and related transactions.
Last week, the SEC proposed “Regulation Crypto Assets,” or Reg Crypto, a tailored framework governing certain digital asset offerings.
The agency said the proposed regime is intended to help companies raise capital while maintaining protections for investors.
Reg Crypto builds on joint SEC and CFTC guidance released in March, which clarified how federal securities laws apply to various cryptocurrencies and digital asset transactions.
The measure could provide crypto businesses with a clearer path for issuing tokens while reducing uncertainty over registration and disclosure requirements.
Despite the recent policy activity, market participants are still waiting for the SEC’s planned innovation exemption.
Atkins has said he intends to introduce a framework that would accelerate the launch of cryptocurrency products and provide regulatory relief for qualifying companies.
The exemption could benefit firms seeking to issue tokenized securities through decentralized networks and other emerging trading platforms.
However, the SEC has not yet formally introduced the framework or provided a definitive timetable for its implementation.
