The U.S. Securities and Exchange Commission (SEC) has eased regulatory barriers for the crypto industry by allowing state-chartered trust companies to act as qualified custodians for digital assets.
In a new no-action letter, the SEC confirmed it will not pursue enforcement against investment advisers or funds that use state trust companies to hold cryptocurrencies and related cash, provided they meet conditions such as annual due diligence, formal custody agreements, risk disclosures, and acting in clients’ best interests.
The move clarifies a long-standing legal gray area, as state trust companies — unlike federally chartered banks — were previously uncertain of their status under the Investment Company Act and Investment Advisers Act. The change could significantly expand the crypto custody market, with players like Coinbase, Ripple, BitGo, and WisdomTree now potentially qualifying.
However, Commissioner Caroline Crenshaw criticized the decision, warning it could undermine investor protections and lower custody standards.
The policy shift aligns with SEC Chair Paul Atkins’ “Project Crypto,” launched in July to reduce regulatory hurdles and accelerate digital asset adoption in the U.S. It represents a major step toward integrating cryptocurrencies into traditional financial infrastructure.
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