In an unprecedented regulatory pivot, the U.S. Securities and Exchange Commission (SEC) has introduced greater flexibility in crypto asset custody, marking a bold new era for digital asset management in mainstream finance.
A statement from the SEC’s Division of Investment Management confirms that registered investment advisers can now utilize state-chartered trust companies as qualified crypto custodians—provided they adhere to strict authorization and oversight standards set by state banking regulators. While the guidance doesn’t alter existing federal law, it grants financial firms the latitude to work with increasingly sophisticated custody structures, as long as these arrangements prioritize investor protection.
Under the new direction, custodial agreements must explicitly prohibit lending or the unauthorized use of client digital assets, and mandates strict segregation of client funds from a trust company’s balance sheet. Advisers remain squarely responsible for ensuring clients’ interests are safeguarded, even within these expanded frameworks.
The move has been welcomed as a clear regulatory signal. Industry figures note that this swap from a historically more restrictive approach signals an ongoing push for operational clarity, dovetailing with the SEC’s recent “Project Crypto” initiative aimed at easing regulatory bottlenecks for digital asset integration.
Of notable consequence, state-chartered affiliates of leading crypto firms—such as Coinbase and Ripple—stand to become preferred custodians, assuming full compliance with these updated expectations.
The SEC’s willingness to outline these parameters extends beyond custody. In a separate no-action letter, the agency drew a line between traditional securities and tokens distributed by decentralized physical infrastructure networks (DePIN). Tokens earned for providing network bandwidth or storage services, for instance, are not considered speculative securities, but rather rewards for participation—paving the way for innovative tokenomics without the overhang of securities regulation.
This evolving stance highlights the Commission’s intent to steward, not stifle, blockchain innovation, while rigorously upholding investor safeguards. For stakeholders in digital finance, the door to broader adoption and institutional capital just swung wider open.
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