The SEC Just Sent Its Crypto Custody Rule Rewrite to the White House - Startup Fortune

The Securities and Exchange Commission has transmitted its proposed rewrite of the cryptocurrency custody rule to the White House for final review. This procedural step, which typically routes through the Office of Management and Budget, signals that the long-awaited text is nearing formal publication in the Federal Register.

The rule governs how registered investment advisers must safeguard client assets. A previous version, introduced in 2023, sought to expand custody requirements to include digital assets more explicitly, drawing criticism from industry participants concerned about compliance costs and the limited availability of qualified custodians. The revised draft is expected to reflect a more incremental approach, distinguishing between different types of assets and clarifying the conditions under which crypto may be held.

For the market, the immediate relevance lies in institutional access. Clear, workable custody rules are a prerequisite for many funds and fiduciaries considering crypto allocations. What to watch is the eventual public text—particularly the definitions of qualifying custodians, any carve-outs, and the transition timeline. Those details will determine who can offer custody services and under what conditions, shaping how professional money flows into the digital asset space.