SEC Crypto Custody Review
SEC Submits Proposed Crypto Custody Rule Changes to White House for Review
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Key Points
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SEC is pursuing Regulation Crypto Assets (RegCrypto) as a tailored offering regime to help raise capital while protecting investors, building on March guidance from the SEC and CFTC about how digital assets fit within federal securities laws.
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The proposed amendments would apply to both the Investment Advisers Act of 1940 and the Investment Company Act of 1940, aiming to clarify crypto custody when ownership and control can depend on private keys and blockchain-based custody.
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An innovation exemption is being discussed to provide regulatory relief for firms issuing tokenized securities on decentralized or novel platforms, with Atkins signaling intent to introduce such a framework to fast-track crypto products.
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Post-OMB review, the plan would require a vote by the three Republican SEC commissioners to publish for public comment, followed by at least a 60-day comment period and a final revote before the rule could take effect.
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Coverage surrounding the move links it to the Trump administration's crypto-friendly regulatory agenda, indicating a broader shift in digital asset regulation.
The SEC has sent proposed crypto custody rules to the White House for review, signaling a major step toward modernizing how investment firms hold client digital assets. CoinGape reports the move aims to clarify custody requirements and remove outdated provisions that no longer match market practices, protecting investors in the process.
The proposal represents Chairman Paul Atkins's push to align SEC rules with real-world digital asset markets. The Block notes the White House review is the first step before SEC commissioners vote to publish the rule for public comment, with potential implementation later this year.
What the SEC's Crypto Custody Rule Changes
The SEC is overhauling how investment advisers and investment companies hold crypto assets under the Investment Advisers Act of 1940 and Investment Company Act of 1940. Bitcoin Magazine explains the amendments would clarify custody when ownership depends on private keys and blockchain-based systems—a reality that older rules never anticipated.
The proposal removes provisions that no longer reflect market practices. CryptoTimes notes the SEC aims to protect investors by making custody rules fit modern digital asset realities, moving away from frameworks designed before crypto became mainstream.
Innovation Exemption Could Speed Crypto Product Launches
Reports suggest the SEC plan includes an innovation exemption to fast-track tokenized securities on decentralized platforms. Bloomingbit indicates Atkins wants to provide regulatory relief for firms issuing novel crypto products, removing barriers that slow product launches.
This exemption would let companies bring crypto securities to market faster without waiting for traditional rule-making timelines. The framework signals the SEC's broader shift toward embracing digital assets rather than blocking them outright.
A Multi-Step Road to Finalization
After the White House finishes its review, the proposal moves to the three Republican SEC commissioners for a vote to publish it. The Block reports a public comment period of at least 60 days would follow, letting investors and firms weigh in before the SEC votes again on a final rule.
If approved after public feedback, the rule could take effect later in 2025. The entire process—from OMB review to final implementation—typically takes months, but the Trump administration's crypto-friendly stance may expedite the timeline.
Part of Broader Digital Asset Regulatory Shift
The custody rule overhaul fits within Chairman Atkins's larger crypto agenda. Recent SEC guidance stated memecoins aren't securities and certain staking activities fall outside securities law, signaling a more permissive stance on digital assets.
CoinGape notes the move aligns with the Trump administration's pro-crypto regulatory approach. The SEC is now working to build a tailored framework—called Regulation Crypto Assets (RegCrypto)—that protects investors while allowing the digital asset market to grow without unnecessary regulatory barriers.
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