The SEC Has Sent a Crypto Custody Rule to the White House. Nobody Outside Has Read It Yet.

The Securities and Exchange Commission has sent a proposed rule on crypto asset custody to the White House Office of Information and Regulatory Affairs. The entry appeared this week under RIN 3235-AN46. What the rule actually says is not public, and will not be until the Commission votes to issue it for comment.

The one sentence that is public

The abstract filed with the proposal is the only description of it available. It says the rule would:

clarify the framework for the custody of crypto assets for investment adviser and investment companies, as well as make other modernizations needed to remove burdens from certain outdated provisions

Reporting on the filing places the rule under the Investment Advisers Act and the Investment Company Act. Which specific rules would be amended is not stated in the abstract.

Where this sits in the process

An OIRA entry is an early marker, not a rule. The sequence that follows it looks like this:

1. Commission staff draft a proposal and it is submitted to OIRA.
2. OIRA reviews it. Reporting on this filing notes the office may request changes before the SEC votes.
3. The Commission votes on whether to issue the proposal.
4. If issued, it is published in the Federal Register with a comment period.
5. After comments, the Commission votes separately on whether to adopt a final rule.

Each of those steps can take months, and a proposal can be changed or dropped at any of them.

The problem it is aimed at

Investment advisers that hold crypto for clients have raised questions about how to comply with custody requirements written for securities held at banks and broker-dealers. That is the gap the abstract points to when it refers to outdated provisions.

What else is moving at the same time

• The SEC proposed Regulation Crypto Assets on August 18, a separate rulemaking covering token offerings.
• The Senate market-structure bill has not come to a vote, and the agencies are proceeding without it.
• The CFTC has signalled it will advance its own crypto rulemaking on a similar footing.

Why it matters

Custody rules decide who is allowed to hold an asset on a client's behalf and under what conditions. For a registered adviser, that is the difference between being able to offer a crypto strategy and not. The rule is worth tracking through the steps above; there is nothing in it to read yet.