SEC Sends Crypto Custody Rule for Advisers to White House Review

The US Securities and Exchange Commission has pushed a rule on how investment advisers hold crypto for their clients to the last stage before it can be published. The agency sent the proposal on 25 August to the Office of Management and Budget, the White House office that reviews draft federal rules before an agency may put them out. Bloomberg reported the filing first on Wednesday, and half a dozen outlets followed the same day. The text is not public. What sits on the record is an abstract, an identification number and a queue.

What the abstract says it would do

The rulemaking is listed as the Crypto Asset Custody Rule for Investment Advisers and Investment Companies. Four accounts quote the same two purposes from the agency's own summary: to "clarify the framework for the custody of crypto assets for investment advisers and investment companies", and to "make other modernizations needed to remove burdens from certain outdated provisions." Bitcoin Magazine renders a third fragment as a plan to "improve and modernize the regulations." Custody is the plain question of who may legally hold a client's coins, and under what safeguards. Nothing in the abstract names an eligible custodian. Large banks have added digital-asset custody services this year without waiting for the answer.

The identifiers do not match

Two numbers circulate for one filing. CoinDesk and Bitcoin Magazine both give the regulatory identification number as RIN 3235-AN46. The Crypto Times instead prints 1449665. The first two agree with each other, the third appears in no other account located, and they do not reconcile. The dates need care too: Cryptobriefing, TFTC and The Crypto Times all put the submission on 25 August, while The Block and CoinDesk reported it the following day without naming a submission date. CoinDesk alone reports a second entry as well, RIN 3235-AN48, covering broker-dealer crypto compliance, and puts October as the month the custody proposal could surface. That timing is carried by one desk and should be read as its expectation.

Several steps still stand in the way

Budget office review comes first, and no deadline for it has been published. The commission would then vote on whether to release the proposal formally; The Crypto Times describes the commission as three-member at present. A public comment period of at least 60 days follows any release. Only after reading those comments could the agency write a final rule. Advisers are bound by none of it today, and because the draft is sealed, the conditions one would eventually have to meet are unknown.

The 2023 version never landed

This is the second run at the same problem. CoinDesk's Wednesday analysis recounts a 2023 safeguarding proposal the agency never finalized, and which drew hard industry comment: the venture firm a16z called it "illegal, infeasible, and dangerous." The language around it at the time was blunt.

"Make no mistake: Based upon how crypto platforms generally operate, investment advisers cannot rely on them as qualified custodians," Gary Gensler, then the SEC's chair, said in 2023.

Paul Atkins chairs the commission now, and the agency has been busy on this file. It proposed Regulation Crypto Assets on 18 August, a separate offering framework with its own comment period. Whether the custody draft sits closer to the 2023 text or well away from it cannot be told while the text is sealed. The only new fact this week is that a draft exists and has entered the queue.