The U.S. Securities and Exchange Commission (SEC) has submitted a proposal to the White House to revise crypto asset custody rules for investment advisers and funds. On August 25, 2026, the document, known as Amendments to the Custody Rules (RIN 3235-AN46), was received by the Office of Information and Regulatory Affairs (OIRA).
According to the SEC's official regulatory agenda, the proposal involves amendments to the rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. The Commission aims to clarify the framework for crypto asset custody by investment advisers and investment companies, while also removing certain requirements it considers outdated in light of changes in the market and approaches to trading and securities custody.
What the Justification Says
The document notes that investment advisers and funds have repeatedly raised the question of how to hold crypto assets within the current SEC requirements. Work on the rules is intended to:
clarify the framework for crypto asset custody by investment advisers and funds;
modernize norms that the SEC considers excessive for investor protection;
account for how the market and approaches to trading and securities custody have changed.
The proposal is classified as economically significant and as one that removes part of the regulation rather than introducing new ones. It received this classification in accordance with President Trump's Executive Order 14192, which requires agencies to repeal existing excessive requirements when introducing new norms. The document is currently in the proposed rule preparation stage, and the SEC plans to publish the Notice of Proposed Rulemaking (NPRM) in October 2026—after which public discussion will commence.
The full text of the proposal is currently closed and may change following OIRA's review. After the document is returned to the SEC, the Commission will have to vote to publish it for public comment—a process that usually takes at least 60 days.
Context: Pause on CLARITY Act
This initiative emerged against the backdrop of Congress's failure to pass a specialized law on the structure of the crypto market. In mid-August, the SEC already announced an open meeting where it discussed creating a separate regime for offering investment contracts related to crypto assets. This occurred shortly after senators were unable to pass the Digital Asset Market Clarity Act (CLARITY) through a vote.
Even before the parliamentary recess, SEC Chairman Paul Atkins stated that the agency was prepared to issue its own rules on digital assets if the Senate did not pass CLARITY. Senate Majority Leader John Thune filed a motion to end debate on the bill, which will be considered after legislators return from recess on September 14. Following that, the document must pass a vote in the Senate, return to the House of Representatives, and only then reach the president's desk.
The revision of crypto asset custody rules fits into the SEC's broader strategy of independent action amidst the prolonged consideration of the CLARITY Act in Congress. The Commission is simultaneously working on industry-specific norms and expects to publish the NPRM in October, while the fate of the market structure law remains in the hands of the Senate and the White House.
AI Opinion
From a data analysis perspective, the SEC's current initiative echoes history: the custody rule for investment advisers did not arise from abstract concern for the market but was a direct response to the collapse of Bernard Madoff in 2008—when the Commission first mandated independent custodian audits by advisers. The new document moves in the opposite direction—it does not tighten control but removes some norms deemed outdated for the crypto market. A technical nuance omitted from the article: crypto assets are physically unlike paper securities, and the question of "who actually holds the private keys" still lacks a unified regulatory answer even within the SEC itself. The deregulatory status of the document adds political weight to the initiative but does not eliminate the risk: without a mechanism for surprise audits, detecting asset custody issues may take longer. What will outweigh—flexibility for the industry or repeating old lessons?
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