The U.S. Securities and Exchange Commission (SEC) is proposing new rules that would outline how broker-dealers and investment advisors may hold cryptocurrency assets in the United States. The White House Office of Management and Budget (OMB) is now reviewing the plan.
It is anticipated that the new regulations would specify where businesses can store cryptocurrency and how they should manage both securities and non-securities. Following the Senate’s failure to go forward with the Digital Asset Market Clarity Act, the SEC was left to continue creating regulations under its current legal jurisdiction.
Source: x.com
Crypto custody refers to the way financial firms hold and protect assets for their customers. In traditional markets, custody arrangements are well established. Crypto presents a different challenge because ownership is recorded on blockchains and assets may be held through wallets and other digital infrastructure.
Taylor Lindman, chief counsel of the SEC’s Crypto Task Force, recently discussed the agency’s plans at a CoinDesk Policy & Regulation event in Washington. The SEC wants to provide financial firms with greater clarity about how they can work with crypto under existing rules.
Whether broker-dealers may manage non-security cryptocurrency assets without requiring a separate registration is one concern that the new regulations may address. Investment advisers may be able to retain client funds via state-chartered trusts, according to the SEC.
This follows the Senate’s September 15 vote of 49–50 on a crucial bill required to advance the Clarity Act. The bill failed because it required 60 votes to pass. The law’s objective was to give digital assets in the US a more thorough structure.
The failed vote has not stopped the SEC’s regulatory work. On September 17, SEC Chairman Paul Atkins said the agency would continue taking action within its existing statutory authority. The SEC has already taken other steps as part of its broader crypto programme, including a temporary exemption covering certain blockchain-based venues trading tokenized stocks.
The custody proposal itself is still at an early stage. It must clear the OMB review before the SEC can formally publish it for public comment. Until then, the details could still change.
The agency has also provided interim guidance while the broader rules are being developed. The current effort follows an earlier custody proposal from 2023 under former SEC Chairman Gary Gensler. That proposal sought tighter requirements around where investment advisers could place clients’ crypto assets but did not become a final rule.
The latest approach forms part of the SEC’s wider effort to establish what Lindman described as the basic foundations for integrating blockchain and digital assets into the existing financial system.
For crypto businesses and traditional financial firms, the eventual proposal could provide a clearer picture of how custody arrangements can work. But until the SEC formally publishes the proposal and completes the public-comment and rulemaking process, the precise requirements remain to be seen.
Taylor Lindman, chief counsel of the SEC’s Crypto Task Force, recently discussed the agency’s plans at a regulation event in Washington. The SEC wants to provide financial firms with greater clarity about how they can work with crypto under existing rules.
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