A rewrite of how registered advisers and funds are allowed to hold crypto custody assets is now sitting inside the White House. The draft, filed under the title Amendments to the Custody Rules, reached the Office of Information and Regulatory Affairs on August 25, and no operative text has been published alongside it. That is the whole difficulty of pricing this development: the direction of travel is clear, the content is not. The Commission has told the market it is responding to advisers asking how to comply with existing custody obligations while holding digital assets, and it lists October as its target for a notice of proposed rulemaking. Registered investment advisers, investment companies, banks and state trust companies all sit inside the perimeter. What follows is what the filing changes, what it leaves unresolved, and the two scenarios an allocator has to hold in tension until the text lands.
The Read
- Draft custody rewrite reached OIRA on August 25, with no proposal language disclosed
- October 2026 is an agency planning target for the proposal, not a legal deadline
- The September 2025 no-action letter remains the operating baseline until a rule replaces it
The Draft Reached OIRA on August 25 With No Text Attached
The filing is a procedural step, not a rule. OIRA review is the checkpoint a Commission proposal has to clear before the Commission can vote to publish it and open a comment window. The Office of Management and Budget can send it back with changes.
What the public record carries is a title and a scope statement. The rulemaking would clarify the framework for the custody of crypto assets for investment advisers and investment companies, and strip out provisions the Commission considers obsolete given how trading and holding practices have moved. No operative proposal language is attached, which leaves every specific question open.
This is the second attempt at the same problem. The Commission withdrew its 2023 safeguarding proposal in June 2025, which closed that rulemaking path and forced a fresh start. Building the file again from zero is what the past fourteen months have been spent on.
The filing also fits a wider sequence under Paul Atkins. The Commission has already put a tailored offering regime on the table with Regulation Crypto Assets, covering raises of up to $5 million over four years and up to $75 million annually with a conditional safe harbor, and it has run a public consultation on innovative ETF rules earlier this year. Custody is the piece that gates institutional size, which is why this filing carries more weight than its two-line record suggests.
What the 2025 No-Action Letter Left Unfinished
The operating baseline today is staff relief, not a rule. On September 30, 2025, the Division of Investment Management issued a no-action letter allowing certain state-chartered trust companies to be treated as banks under the custody provisions of the Investment Advisers Act of 1940 and the Investment Company Act of 1940. That letter is what most crypto custody arrangements at registered advisers currently lean on.
The relief came with conditions that read like a rule without being one: written safeguarding policies, audited financial statements, segregated client assets, and no lending, pledging or rehypothecation without prior written consent. Those four conditions define the operational floor a custodian has to clear before an adviser can use it.
Here is why the distinction matters for a compliance lead. A no-action letter binds staff enforcement posture, not the Commission, and it can be withdrawn without a rulemaking. An adviser building a multi-year product on top of one is carrying a regulatory basis that could be revised faster than the product can be unwound.
That fragility shows up in pricing. A custodian operating under staff relief cannot sign the same length of contractual comfort as one operating under a codified rule, and the difference lands in fee negotiations and in how much of the operational risk each side agrees to carry.
The gap also shows up in adjacent files. When Fidelity filed to stake its $898M Ethereum ETF, the questions raised were custody questions in substance: who holds the asset while it is bonded, who carries slashing exposure, and how a custodian evidences control over something committed to a validator. A written custody rule is where those answers would live.
A Written Rule Would Unlock Mandates a Staff Letter Cannot
The constructive case is narrow but real. Large allocators run investment policy statements that reference rule text, not staff positions. Converting the current arrangement into a codified custody framework removes a documented objection that has kept some mandates on the sidelines regardless of the underlying asset view.
Scope is the second reason to take it seriously. The perimeter named in the filing covers investment advisers, investment companies, banks and state trust companies at once, rather than carving out a crypto-only lane. A single framework across all four categories would let a custodian sell one operating model instead of four regulatory stories.
The stated trigger points the same way. The Commission has framed the rulemaking as a response to advisers asking how to comply while holding client crypto, which is the language of an agency removing friction rather than one building a case. Demand-led rulemaking rarely lands restrictive.
One thing to notice is the direction of the modernization language. Removing provisions the Commission calls outdated points at relief rather than tightening, which is consistent with the rest of the agenda. The same trajectory produced the FDIC clearing US banks to issue stablecoins under the GENIUS Act, and it produced the trust charter wave that gave crypto firms a federal footing.
If the proposal lands close to the 2025 conditions and codifies them, the practical change for an allocator is small on day one and large on a three-year view. The custodian roster stays roughly the same. What changes is that the roster stops depending on a letter that can be pulled.
October Is a Planning Target, Not a Deadline
The bear case starts with the calendar. October 2026 is what the Commission has penciled in for a notice of proposed rulemaking, and the OIRA record carries no legal deadline at all. A proposal is not a final rule either: after publication comes a comment window, then a redraft, then a vote.
Measured against the 2023 attempt, which took roughly two years to reach withdrawal, an effective date in 2027 is the optimistic read. Anyone modeling a compliance change inside the next four quarters is modeling a proposal, not an obligation.
The other side of this is content risk. With no proposal language published, a firm that reads the filing as directional relief is taking a position on an unseen document. Self-custody treatment, multi-signature arrangements, staking and lending activity all sit inside the plausible scope, and each of them can be resolved in a direction that tightens rather than loosens.
There is also a structural asymmetry worth pricing. A tighter-than-expected rule would hit the newer custodians hardest, the ones whose eligibility rests on the state trust route rather than a bank charter. The incumbents with balance sheet and an existing federal footing absorb a stricter regime more easily, which is the pattern that played out when State Street launched its SSCXX stablecoin reserve fund with an established custodian attached.
So the asymmetry to hold is this. The upside is a codified crypto custody framework that converts staff relief into rule text and opens mandates, on a timeline no one controls. The downside is a rewrite that raises the operational bar for the custodians institutions have only just started onboarding. Until the text is public, both sides are priced off a title and a date.
More to come.
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