SEC opens path for state trust companies to act as crypto custodians

The U.S. Securities and Exchange Commission has issued a no-action letter allowing investment advisers to use state-chartered trust companies as qualified custodians for crypto assets.

The letter confirms that organisations regulated under the Investment Advisers Act of 1940 may be treated as “banks” when handling cryptocurrencies and related cash equivalents.

This decision means advisers and regulated funds can hold digital assets such as Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) through state trust companies, similar to how they handle traditional assets.

“This is a textbook example of more clarity for the digital asset space,” Bloomberg Intelligence analyst James Seyffart said, noting that it delivers what the industry has been demanding for years.

The move signals a shift from restrictive policies under “Operation Choke Point 2.0,” when agencies including the Federal Reserve and Treasury limited crypto-related activities in regulated institutions.

The no-action relief was requested by Simpson Thacher & Bartlett LLP on Sept. 30, 2025, seeking assurance the SEC would not pursue enforcement against firms using state trust companies for custody.

The clarification could ease legal uncertainty around custody of digital assets, which has been a sticking point for advisers and funds seeking compliance.

The policy recognises that state trust companies already have the infrastructure and oversight to safely hold digital assets.

“Encouraged to see @SECGov recognizing state-chartered trust companies as qualified digital asset custodians,” Sen. Cynthia Lummis said. “WY paved the way in 2020 by issuing landmark no-action relief, & was criticized by SEC staff. They finally recognized the rigor & value of WY's digital asset supervision.”

The decision is seen as a regulatory breakthrough that could accelerate mainstream adoption of crypto among traditional financial advisers and institutions.

At the time of reporting, Bitcoin price was $113,968.