The SEC's rewrite of custody rules for investment advisers and investment companies has moved into White House review — the last clearance step before the agency can publish it. The proposal landed at the Office of Information and Regulatory Affairs on Aug. 25 with a framework written specifically for crypto assets. In the same move, the SEC withdrew a separate safeguarding proposal from 2023.
A rule built around crypto
The rule sets out how advisers and investment companies must hold client assets. The crypto part is the piece that's new. Custody has been a stubborn problem for digital-asset managers: the old rules weren't built for tokens, and firms have had to patch together their own answers on storage, key control and what happens when a custodian fails.
Sending the plan to OIRA, as the White House office is known, doesn't make it final. But it tells you the SEC has settled on the text it wants to defend. That stage usually comes after the internal back-and-forth is over.
The 2023 plan, dropped
The withdrawal matters as much as the new filing. The SEC's earlier safeguarding proposal, first floated in 2023, is now gone. That's a clean break rather than a patch — the agency chose to start over instead of amending the old draft.
The practical effect: the public will get a fresh document to comment on, with the crypto layer written in from the beginning, rather than a red-lined version of the old one.
What the review does
OIRA review is where a rule's costs and benefits get a final check before publication. There's no hard deadline, and the review typically takes weeks. When it ends, the SEC can send the proposal to the Federal Register and open the formal comment period.
That comment period is where the real fight happens. Advisers, custodians, exchanges and crypto firms will get a chance to push back on the framework — or argue it doesn't go far enough.
Why custody keeps coming up
Custody is the unglamorous piece of the market that regulators keep circling. If a firm can't safely hold what the client owns, nothing else works — trading, compliance, reporting all sit on that foundation. The SEC has been circling this for a while, and this rule is its attempt to write it down.
The SEC hasn't said when the review will end. Once it clears, the draft goes public, and the industry's actual reaction will show up in the comment letters.
