The U.S. Securities and Exchange Commission submitted a proposed rulemaking on August 25, 2026, to the White House Office of Management and Budget that would rewrite how investment advisers and registered funds custody crypto assets. The proposal, titled "Amendments to the Custody Rules," carries...
"We're hoping that in the next few quarters, we can come to market with a credible custody solution." — Citigroup Global Head of Partnerships and Innovation, on the bank's Custody+ platform launch
The U.S. Securities and Exchange Commission submitted a proposed rulemaking on August 25, 2026, to the White House Office of Management and Budget that would rewrite how investment advisers and registered funds custody crypto assets. The proposal, titled "Amendments to the Custody Rules," carries a significant-economic-impact classification from OMB's Office of Information and Regulatory Affairs, meaning its annual effect exceeds $100 million. The full text remains unpublished pending White House review.
The filing lands at a moment of acute structural tension. Coinbase Custody holds approximately $376 billion in institutional digital assets and serves as custodian for 9 of 11 U.S. spot Bitcoin ETFs — roughly 84% of the $91.7 billion ETF complex as of April 2026. That concentration has prompted issuers including BlackRock and ARK 21Shares to add secondary custodians. Meanwhile, five traditional banks — BNY Mellon, State Street, Citigroup, Morgan Stanley, and U.S. Bank — have either launched or committed to launching direct crypto custody services within the past 18 months, creating a parallel institutional track that the SEC's rule could either accelerate or complicate.
The custody rule is the second major SEC crypto rulemaking in two weeks, following the August 18 proposal for "Regulation Crypto Assets," which addresses investment-contract exemptions for token offerings. Together, they form the core of SEC Chairman Paul Atkins' "Project Crypto" agenda, announced in mid-2025, which aims to reshore crypto businesses that left the U.S. during the prior enforcement-driven regime.
The SEC submitted its proposed crypto custody rule to OIRA on August 25, 2026. According to filings tracked by The Block and CoinDesk, the rulemaking would:
The text is not yet public. OIRA review is a procedural checkpoint that typically precedes formal SEC publication for public comment. According to CoinDesk, the proposal represents a "resurrection" of an earlier custody effort that failed under former SEC Chair Gary Gensler, but the current version is described as industry-friendlier and focused on burden reduction rather than restriction.
SEC Chairman Atkins, in his July 7, 2026, statement on the regulatory agenda, stated the commission would "ensure that market participants have maximum choice in how and where they custody and trade crypto assets." Atkins has also affirmed support for self-custody as a "core American value," while acknowledging most institutional investors will continue relying on SEC-registered intermediaries.
The path to the current custody rule began with the removal of Staff Accounting Bulletin 121. Issued in March 2022 under the Gensler SEC, SAB 121 required entities custodying crypto assets to record them as liabilities on their own balance sheets, with corresponding offsetting assets. For banks subject to capital adequacy requirements, this effectively made crypto custody prohibitively expensive — the capital reserves required to offset the on-balance-sheet liabilities rendered the business uneconomic.
In January 2025, the SEC rescinded SAB 121 through SAB 122. The effect was immediate: banks that had been sidelined for nearly three years began development of custody platforms. According to Ankura, SAB 121 had been "the single most effective barrier to bank participation in crypto custody" since its introduction.
The September 30, 2025, no-action letter from the SEC's Division of Investment Management further expanded the custodial landscape. That letter stated the SEC would not recommend enforcement against registered investment advisers or funds that maintained crypto assets with state-chartered trust companies meeting specific conditions, including: state authorization for crypto custody, audited GAAP financial statements, SOC-1 or SOC-2 reports confirming effective controls, custody agreements prohibiting lending or transfer of client assets without written consent, and documented best-interest determinations.
Under existing SEC rules, a "qualified custodian" for purposes of the Investment Advisers Act custody rule includes:
Self-custody, hardware wallets, and non-custodial software do not qualify under the existing framework for investment adviser purposes. How the SEC's new rule redefines or expands the "qualified custodian" designation will determine the competitive landscape. According to the Bitcoin Foundation, "how the agency defines 'qualified custodian' will shape the entire custody ecosystem."
On December 12, 2025, the Office of the Comptroller of the Currency conditionally approved five national trust bank charter applications for digital asset firms:
| Firm | Charter Type | Status (Aug. 2026) | |------|-------------|---------------------| | Circle (First National Digital Currency Bank) | De novo | Final approval granted July 10, 2026 | | Ripple National Trust Bank | De novo | Conditional; final pending | | BitGo Bank & Trust, N.A. | State-to-national conversion | Conditional; final pending | | Fidelity Digital Assets, N.A. | State-to-national conversion | Conditional; final pending | | Paxos Trust Company, N.A. | State-to-national conversion | Conditional; final pending |
Three additional charters followed in February 2026, including Morgan Stanley Digital Trust. According to Forbes, the OCC approvals "formalize a supervised path to stablecoin, custody and tokenization businesses" and signal crypto's integration into the core U.S. banking system.
National trust bank charters enable custody of digital assets, stablecoin issuance, and related services under federal regulation — without full commercial banking powers such as deposit-taking or lending. Circle became the first to receive final OCC approval on July 10, 2026.
Five major banks have entered or committed to entering direct crypto custody in the past 18 months:
BNY Mellon — the world's largest custody bank, with $59.4 trillion in total assets under custody — launched crypto custody in 2022 for Bitcoin and Ethereum, initially for ETF issuers. In August 2026, BNY announced a partnership with Galaxy Digital to add staking capabilities to its digital asset custody platform. In May 2026, BNY expanded to Abu Dhabi Global Market through a collaboration with Finstreet Limited and ADI Foundation.
State Street — the second-largest custody bank globally — launched its Digital Asset Platform in 2026, beginning direct crypto custody for institutional clients.
Citigroup — announced its Custody+ platform in August 2026, targeting Bitcoin custody for institutional clients before year-end. CEO Jane Fraser confirmed in July 2026 that Citi is also "looking at the issuance of a Citi stablecoin" alongside tokenized deposit services for 24/7 corporate settlement. The bank spent two to three years developing the offering.
Morgan Stanley — filed with the SEC a prospectus for the Morgan Stanley Bitcoin Trust, naming Coinbase Custody and BNY Mellon as dual custodians. Received a national trust bank charter in February 2026.
U.S. Bank — committed to launching direct crypto custody services.
The bank entry creates a two-tier custody market: crypto-native firms (Coinbase, BitGo, Anchorage, Fireblocks) competing against traditional financial institutions with existing client relationships and trillions in conventional assets under custody.
Coinbase Custody manages approximately $376 billion in institutional crypto assets. As of April 2026, funds listing Coinbase as custodian or primary custodian accounted for $77.1 billion — 84.1% of the $91.7 billion U.S. spot Bitcoin ETF complex. Coinbase serves as custodian for 9 of the 11 approved spot Bitcoin ETFs.
This level of concentration has drawn attention:
The risk is structural, not speculative. A single-custodian failure affecting 84% of ETF assets would constitute a systemic event for the regulated crypto market. The SEC's custody rule could address this directly by broadening qualified-custodian eligibility or mandating multi-custodian arrangements for funds above certain thresholds. The text of the rule, once published, will clarify whether the commission took this path.
The crypto custody provider market is valued at $3.52 billion in 2026, according to The Business Research Company. The broader institutional crypto custody market is projected to grow from $1.83 billion in 2026 to $14.4 billion by 2034, per Intel Market Research — a compound annual growth rate of approximately 29%.
Custody fee structures vary:
The economic incentive for banks is clear: crypto custody fees are multiples of traditional asset custody fees, and the total addressable market is expanding as regulated vehicles (ETFs, tokenized funds, separately managed accounts) pull more institutional capital into digital assets.
The SEC custody rule, when published, will define the competitive boundaries of a market that has shifted from crypto-native monopoly toward a hybrid structure where traditional banks and crypto firms operate under overlapping federal frameworks. The OCC charter approvals, SAB 122, and the September 2025 no-action letter have already removed the primary structural barriers to bank entry. The SEC's rule will determine whether the remaining barriers — qualified custodian definitions, multi-custodian requirements, and compliance obligations — tilt the market toward further diversification or allow current concentration levels to persist.
The economic value at stake is substantial. Custody is infrastructure — the layer on which ETFs, tokenized funds, staking services, and institutional trading platforms depend. Whoever the SEC designates as a qualified custodian gains access to the fastest-growing segment of institutional asset services. The rule's text, expected after White House review, will be the most consequential piece of crypto infrastructure regulation since SAB 122.