SEC Crypto Custody Framework
SEC advances proposed crypto custody framework to White House for review
Anonymous
Key Points
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The Senate’s effort to advance the Digital Asset Market Clarity Act stalled after a 49-50 procedural vote on September 15, short of the 60 votes required. SEC Chairman Paul Atkins said the agency would continue acting within its existing authority despite the legislative setback.
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The SEC’s 2023 custody proposal took a stricter position: then-Chair Gary Gensler said crypto firms themselves would not qualify to custody digital assets. That proposal never reached final form and was later scrapped after President Donald Trump returned to the White House and appointed crypto-friendly leadership at the agency.
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Taylor Lindman described the SEC’s wider crypto agenda—which includes a proposed framework for crypto offerings and an exemption intended to facilitate tokenized securities—as “foundation laying,” acknowledging that “some of the foundation laying is boring.”
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The SEC has not provided a timetable for the proposal’s OMB review or for the subsequent public-comment process, according to Lindman’s remarks at the CoinDesk Policy & Regulation event.
The SEC is building new rules for how brokers and investment advisers can hold cryptocurrency assets. CoinDesk reports the proposal is now under review at the White House Office of Management and Budget. If approved, the SEC will publish the rule and ask the public and industry for feedback.
This move comes after Congress failed to pass comprehensive crypto legislation. CoinNews notes the Senate's Digital Asset Market Clarity Act fell short on a procedural vote in September, receiving only 49 votes instead of the 60 needed. SEC Chair Paul Atkins said the agency will keep using its existing authority to regulate digital assets.
The SEC's New Custody Framework
The proposed rule clarifies what broker-dealers can do without special registration. They would be allowed to hold non-security crypto assets directly. Investment advisers could keep client assets at state-chartered trusts or other approved locations. CoinDesk reported that Taylor Lindman, an SEC official, described this work as 'foundation laying' for the broader crypto regulatory effort.
A Sharp Turnaround From 2023 Approach
In 2023, under then-Chair Gary Gensler, the SEC took a harder line. That proposal would have banned crypto firms from holding digital assets as custodians themselves. It never became final and was abandoned after President Trump returned to office and appointed crypto-friendly leaders. The new framework is far more permissive.
Congress Stalls on Crypto Legislation
The Senate's push for comprehensive crypto rules hit a wall. CoinNews reported the Digital Asset Market Clarity Act failed on September 15, with only 49 senators voting in favor—11 short of the 60 needed to proceed. This legislative setback left crypto regulation in the hands of agencies like the SEC, which must work within existing laws.
What Happens Next
The SEC has not announced when the OMB review will end or when the public-comment period will begin. CoinDesk noted the agency gave no timeline during recent policy events. Once OMB signs off, the SEC will publish the rule formally and gather feedback from brokers, advisers, and crypto firms before finalizing it.
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