{"id":49951,"date":"2025-10-01T10:38:29","date_gmt":"2025-10-01T03:38:29","guid":{"rendered":"https:\/\/hbbgroup.net\/sec-no-action-letter-creates-opening-for-more-firms-to-serve-as-crypto-custodians\/"},"modified":"2025-10-01T10:38:29","modified_gmt":"2025-10-01T03:38:29","slug":"sec-no-action-letter-creates-opening-for-more-firms-to-serve-as-crypto-custodians","status":"publish","type":"post","link":"https:\/\/hbbgroup.net\/vi\/sec-no-action-letter-creates-opening-for-more-firms-to-serve-as-crypto-custodians\/","title":{"rendered":"SEC No-Action Letter Creates Opening for More Firms to Serve as Crypto Custodians"},"content":{"rendered":"<div>\n<div>\n<h4 color=\"#333\">In brief<\/h4>\n<ul>\n<li>The SEC will not take enforcement actions against advisors and other entities for using state-chartered as crypto custodians.<\/li>\n<li>This letter could lead to a potential opening for a greater number of organizations to serve as custodians for digital assets.<\/li>\n<li>In July, Chair Paul Adkins unveiled\u00a0\u201cProject Crypto, an SEC initiative to dramatically lower regulatory burdens.<\/li>\n<\/ul>\n<\/div>\n<p>The U.S. Securities and Exchange Commission said in a <a href=\"https:\/\/www.sec.gov\/rules-regulations\/no-action-interpretive-exemptive-letters\/division-investment-management-staff-no-action-interpretive-letters\/simpsonthacherbartlett093025\" target=\"_blank\">letter<\/a> on Tuesday that it did not plan to take action against registered investment advisors, issuers of crypto funds, and other entities for using state-chartered trusts to hold digital assets.<\/p>\n<p>The updated guidance, a response from the SEC&#8217;s Division of Investment Management to a query filed by lawyers representing financial advisors, creates a potential opening for a greater number of organizations to serve as custodians for these assets, including affiliates of prominent crypto-focused firms such as Coinbase and Ripple.<\/p>\n<p>&#8220;Based upon&#8230;.your letter, the Division of Investment Management would not recommend enforcement action&#8230;.against a Registered Adviser or Regulated Fund for treating a State Trust Company as a &#8216;bank&#8217; related to placement and maintenance of Crypto Assets and Related Cash and\/or Cash Equivalents,&#8221; the SEC letter said, as long as certain criteria are met both by the advisor and the trust.<\/p>\n<p> The SEC letter offers the latest <a href=\"https:\/\/decrypt.co\/250846\/republican-lawmakers-urge-sec-rescind-controversial-crypto-rule-again\" target=\"_blank\">shift<\/a> from the SEC&#8217;s less forgiving approach to crypto under former Chair Gary Gensler, who sought to limit the types of organizations that could custody digital assets.<\/p>\n<p>In July, current Chair Paul Adkins unveiled\u00a0<a href=\"https:\/\/decrypt.co\/333001\/sec-chair-paul-atkins-project-crypto-icos-airdrops\" target=\"_blank\" rel=\"noopener\">\u201cProject Crypto,<\/a> an SEC initiative <a href=\"https:\/\/decrypt.co\/340898\/sec-chair-paul-atkins-crypto-innovation-exemption-coming-this-year\" target=\"_blank\">to dramatically lower<\/a> regulatory burdens for the crypto industry and to accelerate the integration of digital assets within the traditional U.S. economy.<\/p>\n<p>The Investment Advisers Act of 1940 requires that advisors maintain client assets with a bank, trust or other qualified custodian holding national fiduciary duties. Crypto supporters have used this legislation to enable a wider range of crypto initiatives.<\/p>\n<p>The letter is not a formal rule or regulation and therefore has &#8220;no legal force or effect&#8221; or &#8220;alter or amend applicable law,&#8221; the SEC noted.<\/p>\n<p>But the agency made advisors responsible for ensuring that a registered trust is authorized by relevant banking authorities to provide crypto custody services and has written policies and procedures to protect those assets, addressing such issues as private key management.<\/p>\n<p>Custodial agreements that advisors sign should also ensure that the trust will not lend or otherwise use funds without a client&#8217;s consent, and that crypto assets &#8220;will be segregated from the State Trust Company\u2019s assets.&#8221;<\/p>\n<p>Trusts may serve as custodians, provided &#8220;the Registered Adviser determines that the use of the State Trust Company\u2019s custody services is in the best interest of the RIA Client or Regulated Fund and its shareholders,&#8221; the SEC letter said.<\/p>\n<p>The letter drew praise from Bloomberg ETF Analyst James Seyffart, who in an X post <a href=\"https:\/\/x.com\/JSeyff\/status\/1973126001048608935\" target=\"_blank\" rel=\"nofollow external noopener\">wrote<\/a> it was &#8220;a textbook example of more clarity for the digital asset space.&#8221;<\/p>\n<p>&#8220;Exactly the sort of thing the industry was asking for over the last few years,&#8221; he wrote. &#8220;And it keeps coming.&#8221;<\/p>\n<div>\n<h3>Daily Debrief Newsletter<\/h3>\n<p>Start every day with the top news stories right now, plus original features, a podcast, videos and more.<\/p>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>In brief The SEC will not take enforcement actions against advisors and other entities for using state-chartered as crypto custodians. 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