SEC sends crypto custody rule changes to White House for review

The SEC sent proposed changes to its rules for investment advisers holding digital assets to the White House for review this week. The Office of Information and Regulatory Affairs is reviewing the changes before publication. The SEC said investment advisers had asked how they could hold crypto assets for clients while complying with its requirements. The SEC said the rulemaking would clarify custody rules for investment advisers and investment companies. The proposal would also modernize provisions that the SEC considers outdated because of changes in markets and securities trading and holding practices. SEC Chair Paul Atkins has pursued additional digital asset regulatory changes over the past year. The SEC issued guidance saying memecoins are not securities. The SEC also issued guidance on which staking activities would fall outside securities law. Last week, the SEC proposed Regulation Crypto Assets as a tailored offering regime designed to help raise capital while protecting investors. The proposal builds on guidance that the SEC and the Commodity Futures Trading Commission released in March on how federal securities laws apply to digital assets and transactions. Atkins has said he plans to introduce an innovation exemption framework to fast-track crypto products. That framework has not yet been introduced. The exemption would provide regulatory relief to firms seeking to issue tokenized securities on decentralized or other novel platforms.