SEC Crypto Custody Rewrite Enters White House Review, October Notice Planned

The SEC's proposed rewrite of custody rules for investment advisers and investment companies entered White House review on August 25, 2026, per The Defiant's reporting. The framework represents the Commission's second attempt to clarify how wealth managers and funds can hold crypto assets in compliance with federal safeguarding standards. The SEC withdrew a similar proposal in June 2025, after issuing it in February 2023. That earlier version would have expanded the custody rule to all client assets and proposed additional protections involving segregation and custodian insolvency. The Commission stated at the time that any future regulatory action in custody would require a new proposed rule, effectively restarting the process. The current rewrite covers both investment adviser client assets and investment-company fund assets. According to The Defiant, the SEC's agenda targets October 2026 for a notice of proposed rulemaking.Under current SEC custody rules, investment advisers must ensure a qualified custodian maintains client funds and securities in separate client accounts or accounts held by an adviser as agent or trustee. Advisers and investment companies have raised questions about holding crypto assets in compliance with these existing requirements, according to The Defiant. White House review follows Executive Order 12866, which requires agencies to submit significant regulations to the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA) before publication. A 2025 White House order confirmed that agencies must continue following this process. The SEC's agenda lists no legal deadline for the action beyond the October 2026 rulemaking target.