SEC Proposes Custody Framework to Unlock Institutional Crypto Adoption
The SEC submitted proposed custody rule changes to the White House, aimed at clarifying how investment advisers and funds can hold digital assets for clients. The proposal reflects the agency's broader shift toward crypto-friendly rulemaking under new leadership.
SEC Proposes Crypto Custody Framework
The U.S. Securities and Exchange Commission is advancing an overhaul of custody rules governing how investment advisers and investment companies manage digital assets on behalf of clients. On August 25, the agency submitted its proposed amendments to the Office of Information and Regulatory Affairs (OIRA), a White House body responsible for reviewing federal regulations before they move toward public comment. This submission represents a significant step toward providing institutional clarity on digital asset management.
The proposed changes target rules under both the Investment Advisers Act and Investment Company Act, seeking to establish explicit guidelines for institutional crypto holdings. Currently, significant uncertainty around custody requirements has created barriers for investment firms seeking to offer digital asset services to clients while remaining compliant with federal securities regulations. The SEC has signaled that addressing this ambiguity is essential for industry growth.
Clarity for Institutional Adoption
The regulatory overhaul aims to address the uncertainty around how investment managers can hold crypto assets under existing federal frameworks. By establishing clear custody standards, the agency hopes to enable investment advisers and funds to confidently offer digital asset services to clients. The move acknowledges that institutional participation requires regulatory certainty rather than ambiguous enforcement-based guidance.
The proposal is not yet public, as it currently undergoes White House review through OIRA. The Office of Management and Budget can request modifications before returning the rule to the SEC, which would then vote on releasing it for formal public comment. This standard review process typically takes several weeks to months before advancing to the next stage.
Crypto-Friendly Shift Under New Leadership
The custody proposal reflects the SEC’s notable shift toward a more crypto-friendly regulatory posture since Paul Atkins took office as chair in 2025. Atkins has publicly rejected the agency’s previous “regulation through enforcement” approach, instead committing to advance digital asset policy through formal rulemaking processes that offer the industry greater clarity and predictability.
This repositioning represents a significant departure from prior SEC tactics under previous leadership. The agency has dismissed multiple lawsuits against major crypto firms in 2025, including its enforcement action against Coinbase, signaling a fundamental reorientation of enforcement priorities. According to Bloomberg, the custody proposal aligns with the Trump administration’s stated goal of fostering digital asset innovation. Meanwhile, the broader CLARITY market structure bill—which would establish comprehensive regulatory frameworks for crypto markets—remains stalled in the Senate, with lawmakers expected to hold a procedural cloture vote after returning from the August recess in September.
The proposed custody framework signals the SEC’s recognition that regulatory clarity drives institutional participation in digital asset markets. For XRP and the broader crypto ecosystem, clearer custody standards could represent a significant catalyst for institutional adoption by removing the ambiguity that has previously hindered investment firm participation.
Source: SEC, via Cointelegraph. Not financial advice.