Key Takeaways
- SEC sent its custody rewrite to OIRA, targeting an October 2026 proposal.
- Paul Atkins’ SEC could reshape crypto custody after dropping Gensler’s 2023 plan.
- OIRA’s 2026 review could affect self-custody, staking, lending and DeFi rules.
SEC Sends Major Custody Rule Rewrite to the White House
On Wednesday, Law360 reported that the U.S. securities regulator has submitted a proposal to the OIRA, an agency associated with the White House Office of Management and Budget. The filing is labeled “economically significant,” and the SEC is zeroing in on publishing the proposed rule in October. As of today, the unpublished draft can be revised during the OIRA review process.
Going forward, the SEC would need a commissioner’s vote and collect public comments. The draft is considered a major re-write to current rulesets. The proposal is meant to differentiate the way traditional finance (TradFi) assets are held by a custodian from digital assets. The SEC already has a policy set for TradFi with “qualified custodians,” which represent registered brokers, banks, and state-chartered trust companies.
Digital Assets Force the SEC to Rethink Qualified Custodians
Reports detail that the SEC’s new rulemaking is meant to modernize provisions so they apply to investment advisers and investment companies. Current asset holding practices are outdated, and digital assets have changed the game. Current TradFi rules muddled with today’s crypto asset economy have left lawyers, advisors, and companies with questions on what a qualified custodian is when it applies to blockchain assets.
Atkins Scraps Gensler’s Approach as SEC Charts a New Course
The latest draft is quite different from former SEC Chair Gary Gensler’s 2023 rules that never actually became finalized. Gensler’s plan was essentially an extension of existing custody requirements and aimed to bring blockchain assets under the same umbrella. Under Chair Paul Atkins, the SEC formally withdrew Gensler’s proposal and the regulator noted that a new proposal was needed. The latest proposal has a “deregulatory” designation, but it is not yet public what changes these will bring.
Self-Custody, Staking, and DeFi Could Face New Rules
If the proposal goes forward, it could change how advisors and custodians handle self-custody, multi-signature arrangements, staking, lending, and other decentralized finance (DeFi) activities. The SEC and the OIRA may also reveal how independent verification for blockchain projects would work, and things like surprise examinations. What happens next will entirely depend on the OIRA and White House review. While an October deadline is penciled in today, the date could move forward, and many items could change.
