SEC No-Action Letter Creates Opening for More Firms to Serve as Crypto Custodians

The U.S. Securities and Exchange Commission (SEC) has announced it will not take enforcement action against investment advisors and other entities using state-chartered trusts to hold digital assets. This new guidance could allow more firms, including those affiliated with major crypto companies, to act as custodians for cryptocurrencies. The SEC letter indicates that as long as certain criteria are met, using a state trust company for crypto custody could be treated similarly to traditional banking practices. The letter emphasizes that advisors must ensure that the trust is properly authorized and must implement policies for asset protection. This decision marks a shift from previous regulatory stances under former Chair Gary Gensler, potentially easing compliance burdens for the crypto industry. The clarification has been well-received by industry analysts, who see it as a critical step towards integrating digital assets into mainstream finance.

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