The US Securities and Exchange Commission has proposed new rules to define how registered investment advisers and regulated funds hold crypto assets under federal securities law, according to an Oct. 2, 2026 report. The proposal follows the failure of the CLARITY Act to advance through Congress.

The SEC said the framework would address the legal status of crypto custody arrangements and the obligations of qualified custodians that safekeep client assets. The rulemaking aims to convert a patchwork of guidance into a binding standard for advisers and fund operators.

What does the SEC custody proposal change?

The proposed rules would set conditions under which registered investment advisers and regulated funds can hold digital assets on behalf of clients. By codifying those conditions, the SEC would replace case-by-case guidance with a defined compliance baseline.

The proposal arrives after the CLARITY Act, legislation intended to draw jurisdictional lines between the SEC and the Commodity Futures Trading Commission over digital assets, failed to advance. Without that statutory foundation, the agency has turned to administrative rulemaking.

Institutional market participants have argued that custody uncertainty has constrained product launches and limited the range of advisers willing to allocate to crypto. A finalized rule would clarify the obligations of qualified custodians, the segregation of client assets, and the standards advisers must meet when safekeeping positions.

Where does Jay Clayton fit?

Reporting on Oct. 2, 2026 also indicated that President Donald Trump will name Director of National Intelligence Jay Clayton as an artificial intelligence czar. Clayton will retain his DNI role while taking on the AI portfolio.

The AI czar role will leave cryptocurrency policy outside Clayton's mandate, with the file handled by White House adviser Patrick Witt, according to the report. The division keeps the administration's AI and digital-asset tracks separate at a moment when both face heightened scrutiny.

Clayton's expected appointment has revived attention on his SEC chairmanship. During his tenure, the agency created the Cyber Unit in 2017 to focus on digital assets, cryptocurrency violations, and cyber-related fraud.

What was Clayton's SEC record?

By the end of 2020, the SEC had brought 57 cases involving initial coin offerings, blockchain technology, or digital assets, according to a commission summary. The matters included alleged investor fraud and securities-registration violations.

The cases shaped the legal perimeter that issuers and advisers still navigate. They also established the investigative posture the Cyber Unit carried forward into subsequent administrations.

What happens next?

The custody proposal now enters the standard rulemaking track. Publication in the Federal Register will open a public comment period, after which the SEC can revise the text before final adoption.

For registered investment advisers and funds, the rulemaking is the more immediate development. Compliance teams will need to track how the SEC resolves questions on qualified custodians, segregation of client assets, and the treatment of staking or lending within custody arrangements.

For issuers and token projects, Clayton's return to a senior policy role adds reputational weight to token launches and fundraising activity, despite crypto sitting outside his AI czar mandate. His SEC record signals that the templates built under his chairmanship remain part of the commission's enforcement toolkit, even as Patrick Witt continues to steer the White House's day-to-day digital-asset file.