Woofun AI reports that the SEC has advanced a comprehensive overhaul of crypto custody rules, transmitting the proposal to the White House under the leadership of Chair Paul Atkins. This strategic move targets the clarification of institutional asset holding practices, seeking to align federal securities compliance with emerging digital asset standards.

The proposed rule was forwarded on Aug. 25 to the Office of Information and Regulatory Affairs (OIRA), a division of the Office of Management and Budget, for mandatory review. The regulatory changes, grounded in the Investment Advisers Act and Investment Company Act, address how advisers and funds manage client crypto assets. This administrative step occurs as the CLARITY market structure bill remains stalled in the Senate, with a cloture vote anticipated after lawmakers return from the August recess in September. Per Woofun AI, the OIRA retains the authority to request modifications before the document returns to the SEC for potential public comment.

Structurally, this initiative aligns with the Trump administration's broader digital asset agenda, marking a decisive departure from the prior era of 'regulation through enforcement.' Since assuming the chairmanship in 2025, Atkins has prioritized formal rulemaking, a shift evidenced by the dismissal of several high-profile 2025 enforcement actions, including the lawsuit against Coinbase. This regulatory philosophy aims to provide industry certainty where legislative progress has lagged.

The next phase involves a commission vote on whether to release the rule for public comment, a critical juncture for establishing final federal securities rules. Until this procedural hurdle is cleared, institutional players face continued uncertainty regarding compliant custody frameworks. This marks a significant transition toward clarity in digital asset regulation.