SEC's Crypto Custody Rule Under White House Review, Likely to Be Released This Year

The U.S. Securities and Exchange Commission (SEC) has advanced a proposed rule establishing crypto asset custody standards for broker-dealers and investment advisers to the White House review stage. Once the proposal clears the Office of Management and Budget (OMB), it will be formally published and open for industry comment.

Taylor Lindman, senior adviser to the SEC's Crypto Task Force, disclosed the development on the 22nd (local time) at a CoinDesk policy and regulation event in Washington. He explained that the proposal addresses pathways for broker-dealers to hold non-security crypto assets without separate special registration, as well as the scope of qualified institutions where investment advisers may place client assets.

The proposal also includes provisions recognizing state-chartered trust companies as custodians for client assets. This formalizes the SEC's September 2024 action allowing investment advisers to use state-chartered trust companies as qualified crypto custodians.

"The broad direction is to ensure that existing securities intermediaries and market participants don't feel friction in leveraging blockchain and holding or trading crypto assets," Lindman said. "That includes both crypto assets that qualify as securities and non-security crypto assets."