SEC No-Action Relief for State Trust Companies Custodying Digital Assets

The SEC is beginning to align its custody framework for digital assets with industry practice. The SEC’s Division of Investment Management has issued a no-action letter confirming that certain state-chartered trust companies may serve as qualified custodians for digital assets and related cash equivalents under the Investment Advisers Act and the Investment Company Act. This means that registered investment advisers and funds can now custody crypto assets with eligible state trust companies, entities the SEC staff is now willing to treat as “banks” for custody purposes.