The U.S. Securities and Exchange Commission (SEC) has issued a pivotal “no-action” letter on September 30, 2025, confirming that registered investment advisers can rely on state-chartered trust companies as qualified custodians for cryptocurrencies. The move addresses long-standing federal uncertainty around digital asset custody, allowing institutions to manage assets such as Bitcoin ($116,426) and Ethereum ($4,311) with greater regulatory confidence.
Under the Investment Company Act of 1940, the decision grants state trust companies authority to safeguard and manage cryptocurrencies in the same manner as cash or cash equivalents. Bloomberg Intelligence analyst James Seyffart described the ruling as much-needed clarity for the market, emphasizing the security assurances it brings. The action follows a petition from Simpson Thacher & Bartlett LLP, which requested regulatory assurance that advisers and funds using state-chartered custodians would not face penalties. The decision also marks a softening in the SEC’s previously strict stance, especially after initiatives like “Operation Choke Point 2.0,” where federal agencies restricted financial access for crypto firms.
Political support quickly followed, with Senator Cynthia Lummis of Wyoming praising the recognition of her state’s pioneering 2020 crypto trust regulations. The ruling highlights the growing role of state-chartered entities, whose infrastructure is well-equipped for complex digital custody operations. By legitimizing these institutions, the SEC may open doors for wider institutional adoption, the launch of new investment products, and stronger investor protections.
Experts see the measure as a turning point, likely accelerating integration between banks, funds, and digital finance in the years ahead.