By Nitesh
- The SEC sent “Amendments to the Custody Rules” to the White House on 25 August, filed as RIN 3235-AN46 and marked both Economically Significant and Deregulatory.
- The agency’s own filing says advisers “have raised questions about how to hold crypto assets in compliance with the current Commission custody requirements.”
- The rule would rewrite custody under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. The SEC’s timetable targets a proposal in October 2026.
- Two days later, on 27 August, India’s Standing Committee on Finance cancelled the hearing where the Finance Ministry was due to testify on virtual digital assets. No reason given, no new date.
The SEC crypto custody rule is now with the White House. A draft titled “Amendments to the Custody Rules” reached the Office of Information and Regulatory Affairs on 25 August under RIN 3235-AN46, and the Unified Agenda entry is public even though the rule text is not.
That entry is more informative than the silence around the SEC crypto custody rule suggests. It names the statutes being amended, the agency division writing it, the officer to contact, and the reason the SEC thinks the work is necessary.
What the SEC crypto custody rule actually says
The abstract states that the Division of Investment Management is considering recommending “amendments to existing rules and/or new rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 to improve and modernize the regulations around the custody of advisory client and fund assets, including to address in each case crypto assets.”
The Statement of Need is blunter, and it is the most quotable thing in the document:
Currently, investment advisers and investment companies have raised questions about how to hold crypto assets in compliance with the current Commission custody requirements. This rulemaking would clarify the framework for the custody of crypto assets for investment adviser and investment companies, as well as make other modernizations needed to remove burdens from certain outdated provisions that are no longer needed to provide investor protection.
“Remove burdens” is the operative phrase. The filing is tagged Deregulatory under Executive Order 14192, the January 2025 order requiring agencies to repeal ten rules for every new one, and rated Economically Significant, meaning an expected annual impact above $200 million. The legal authorities cited include 15 U.S.C. 80a-17(f), the provision governing custody of investment company assets, and 15 U.S.C. 80b-18b. The listed agency contact is Samuel Thomas in the Division of Investment Management.
The timetable line reads NPRM 10/00/2026. That is an internal plan, not a legal deadline. There is no statutory clock on this rule.
Why it took three years to get here
The previous attempt at an SEC crypto custody rule, the 2023 safeguarding proposal, tried to stretch the custody regime across a broad range of client assets at once. Industry opposition was heavy and the agency withdrew it. This filing is narrower, crypto-specific, and arrives in a materially different regulatory climate.
That climate is visible in the agency’s recent record. In April, as TechToken reported when the SEC and CFTC jointly named 16 cryptocurrencies as digital commodities, the two agencies resolved a jurisdictional question that had been open for years.
The SEC crypto custody rule is the next structural gap, and it is the one that determines whether regulated money can hold the asset rather than merely trade exposure to it.
The demand is not hypothetical. Bitcoin ETFs pulled in $18.7 billion in the first quarter of 2026, and Schwab opened spot Bitcoin trading to 35 million retail clients in May.
Advisers already have clients holding the asset. What they have lacked is a rule telling them how to hold it themselves. If you want the mechanics of why the ETF wrapper solved access but not custody, our plain-English guide to how Bitcoin ETFs work covers the structure.
Two days, two directions for the SEC crypto custody rule and India
On 27 August, India’s Standing Committee on Finance cancelled the sitting at which the Department of Economic Affairs was scheduled to give evidence on virtual digital assets.
The notice was issued on 20 August and signed by committee director Bharti Sanjeev Tuteja, stating that the sitting “stands CANCELLED” without explanation, as first reported by The Crypto Times. No replacement date has been listed on the Lok Sabha committee schedule.
The DEA’s testimony was expected to form the evidentiary basis for the committee’s standalone report on VDAs. The department’s own discussion paper has reportedly been shelved five times since May 2025.
The contrast is not that America has good rules and India has bad ones. Neither country has a crypto custody rule today.
The difference is that one of them has a process producing dated, numbered, publicly trackable artefacts. An American adviser can open RIN 3235-AN46, read the Statement of Need, see the October target, and plan around a comment period. An Indian adviser has a cancelled hearing and an unpublished paper.
What India has instead of a framework
India does not lack crypto policy. It lacks the equivalent of an SEC crypto custody rule.
The tax treatment is unambiguous: a flat 30% on gains, 1% TDS on transactions, and no offset of losses against other income. Virtual digital assets are therefore legible to the state for taxation and illegible to it for institutional custody. A domestic fund cannot readily hold what the exchequer will nonetheless tax.
Oversight is still being negotiated rather than assigned. The working split under discussion places SEBI over exchanges and tokens that behave like securities, the RBI over cross-border flows, and the Finance Ministry over tax.
The 36th Report on the Securities Markets Code, tabled on 23 July, recommended an interim framework run through recognised self-regulatory organisations under a designated statutory regulator.
An SRO is not a custody rule. It is a placeholder for one.
TechToken Take
The consequence that matters for Indian readers is not American deregulation. It is that a clearer SEC crypto custody rule widens the gap between where Indian capital can legally go and where it can legally be held.
Indian institutional and family-office money already reaches crypto indirectly, through US-regulated vehicles accessed under the Liberalised Remittance Scheme.
If the SEC removes the compliance ambiguity that currently keeps American advisers cautious, the supply and sophistication of those vehicles increases. Meanwhile a domestic Indian adviser still has no custody rule to comply with, and therefore no compliant product to sell.
That asymmetry routes Indian allocation offshore by default rather than by choice. It is a slow leak, not a dramatic one, and it is the specific and measurable cost of a hearing cancelled without a reason. Every quarter the DEA paper stays shelved, the offshore route gets relatively more attractive and the domestic one stays theoretical.
What to watch
Three markers, in order.
First, how long OIRA holds the SEC crypto custody rule. A short review suggests the White House reads it as genuinely deregulatory; a long one suggests friction inside the review process. The pending-review docket is public at reginfo.gov.
Second, whether the SEC meets its own October target, and whether the published text distinguishes between qualified custodians, bank custody and self-custody. That distinction decides which institutions can compete for the mandate.
Third, and easiest to check: whether India’s Standing Committee on Finance reschedules the DEA sitting before the winter session. Six weeks of silence on a hearing cancelled without explanation would say more about India’s crypto timeline than any tax circular.
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