SEC starts work on U.S. crypto custody rule after earlier failure

The SEC is taking preliminary steps toward a new proposed rule for custody of crypto assets by investment advisers. An earlier SEC effort to tighten where advisers could hold client crypto assets failed under the previous administration, when Gary Gensler was chair. The SEC sent the concept this week to the White House Office of Management and Budget. The concept will remain under review before the agency can formally propose the rule. The proposal is expected to be friendlier to the crypto industry. The SEC's regulatory agenda says the effort would improve and modernize custody regulations for investment adviser client assets and fund assets, including crypto assets. The proposal would also remove burdens from outdated provisions that are no longer needed for investor protection because of changes in markets and security trading and holding practices.