The SEC restarts the custody rule it abandoned in 2023

What happened

The Securities and Exchange Commission's rulemaking to rewrite the custody rules, RIN 3235-AN46, is listed on the federal regulatory agenda as 'Amendments to the Custody Rules' at the proposed rule stage, with a notice of proposed rulemaking targeted for October 2026. The entry says the rulemaking would 'improve and modernize the regulations around custody of advisory client and fund assets, including to address in each case crypto assets', and that it would 'clarify the framework for the custody of crypto assets' under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. It is marked economically significant and deregulatory under Executive Order 14192. The Block and CoinDesk both reported on 26 August that the proposal had been sent to the White House for review; the agenda entry itself carries no date for that step, and the date here is the reports'.

Why it matters

The last attempt at this failed. A 2023 proposal would have confined advisers to chartered banks, trust companies, broker-dealers and futures commission merchants as qualified custodians, which in practice would have excluded most crypto custodians, and it was withdrawn after opposition. Restarting it decides who is allowed to hold client crypto, and therefore which institutions can serve funds and advisers at all. It arrives as banks build custody products of their own, so the rule will be written into a market that has already begun to take a shape.

What is not settled

No text is public, which is the whole difficulty in reading this. Nobody outside the agency knows how far the new approach departs from the 2023 qualified-custodian standard, and October is a target on an agenda rather than a commitment. Whether the deregulatory designation implies a wider definition of who may custody, or only a lighter compliance burden on the same set, is not stated in the entry.