SEC Sends Crypto Custody Overhaul to the White House
The SEC filed a crypto custody proposal (RIN 3235-AN46) with the White House on Aug 25. What it means for advisers and institutional crypto adoption.
A rule the industry has waited years for
The SEC sent a crypto custody proposal to the White House's Office of Management and Budget on August 25, filed as RIN 3235-AN46, "Amendments to the Custody Rules." It rewrites core provisions of the Investment Advisers Act of 1940 and the Investment Company Act of 1940: the statutes that govern how registered advisers and funds are allowed to hold client assets.
The point is legal clarity where there was fog. The old custody rule forces advisers to park client assets with a "qualified custodian," a clean fit for stocks and bonds but an awkward one for Bitcoin and Ether. Plenty of firms simply steered clear of digital assets rather than wrestle the ambiguity. The new draft aims to strip that friction out and scrap outdated requirements the SEC now views as dead weight for investor protection.
The process tempers the excitement
This is a starting gun, not a finish line. OMB has to clear the draft first. Only then can the SEC formally vote, publish the text, and open a comment window of at least 60 days. The full language isn't public yet. A final rule is realistically months away, possibly more than a year.
The move fits the agency's turn under new leadership. The Gensler-era 2023 "Safeguarding" proposal tightened custody obligations and set much of the industry against it. Today's SEC is steering the other way: less friction, more room for regulated players to participate.
Structure versus sentiment
For price, the filing barely registers this week. Bitcoin sits near $79,000 on Thursday after briefly clearing $80,000 to start the week. Ether holds $2,500; Solana stands out with a near 6% gain. The tape is fixated on Friday instead: Fed Chair Kevin Warsh speaks at Jackson Hole, and futures have swung back toward pricing a rate hike. That weighs on risk far more than any custody tweak.
Still, the split is worth respecting. The rate bet drives the near term; market structure drives the medium term. A clean custody regime lowers the bar for pension funds, RIAs and investment companies that balked at the compliance risk, and that is where the next tranche of institutional money waits. Traders playing adoption over quarters should keep this one on the calendar, even as the ticker looks to Jackson Hole.