SEC Sends Crypto Custody Reform to White House as Regulator Shifts Strategy
The SEC has sent a crypto custody reform proposal to the White House, aiming to update rules for the Investment Advisers Act and Investment Company Act. The shift under Chairman Paul Atkins signals a move from enforcement to rulemaking.
The SEC has sent a reform package on crypto custody rules to the White House, marking the most concrete regulatory step under Chairman Paul Atkins. The document, filed with the Office of Information and Regulatory Affairs (OIRA), proposes amendments to the Investment Advisers Act and the Investment Company Act of 1940. It aims to modernize custody rules for client and fund assets, including crypto assets.
The reform targets a structural bottleneck. Investment advisers and management companies have faced custody rules written for traditional securities, which created compliance uncertainty for digital assets. Many institutional firms stayed on the sidelines rather than risk violating outdated requirements. The SEC's proposal seeks to remove that ambiguity and eliminate provisions that no longer fit the market, while maintaining investor protections.
The proposal is titled "Amendments to the Custody Rules" and is now under OIRA review, a step that precedes formal publication. The document specifies the Commission intends to update how financial actors can legally hold cryptocurrencies on behalf of clients.
Separately, the Hyperliquid Policy Center (HPC) has pressed the SEC and CFTC to adopt a harmonized framework for perpetual contracts, derivatives with no expiration date. In a joint letter to both agencies, HPC argues that a perpetual contract should be classified by its economic structure rather than the underlying asset it tracks.
The issue is not academic. Hyperliquid's HIP-3 markets have generated over $480 billion in trading volume in ten months, with roughly $4 billion in open interest. Without clear taxonomy, jurisdictional disputes between the SEC and CFTC end up in court. A harmonized framework would let platforms compete on execution quality and liquidity, HPC argues.
The timing aligns with recent remarks by President Donald Trump, who referenced CFTC work to allow Hyperliquid to operate fully compliant in the United States.
Both efforts share a common goal: ending the regulatory uncertainty that has slowed crypto adoption in the U.S. The custody reform is the most tangible signal that the SEC is shifting from enforcement-only to rulemaking. Whether the text survives OIRA review without material changes will determine how quickly institutional custody expands.
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