The U.S. Securities and Exchange Commission (SEC) is taking another step toward updating how investment advisers safeguard client assets, including cryptocurrencies, after its previous attempt under former Chair Gary Gensler failed to become final.

The SEC has now sent the early-stage custody rulemaking concept to the White House Office of Management and Budget (OMB) for review. While the agency has revealed few details about the proposal, its regulatory agenda indicates that the new effort would modernize custody requirements for investment adviser clients and fund assets while specifically addressing crypto assets.

The development comes as the SEC under Chairman Paul Atkins takes a more crypto-friendly approach to digital asset…