The United States Securities and Exchange Commission has taken another step toward easing the path for the digital asset industry.
On Tuesday, the SEC approved state trust companies to act as custodians for crypto assets under the Investment Company Act and the Investment Advisers Act.
State entities that are not federally chartered banks, which were generally not allowed to accept deposits, may now be responsible for the safety of investors’ crypto assets.
The no-action letter addresses uncertainty about whether state trust companies qualify as “banks” under the Acts for purposes of holding crypto assets and related cash.
Greenlight For Crypto Companies
The SEC will not recommend enforcement action against registered investment advisers or regulated funds that treat state trust companies as qualified custodians for crypto assets, subject to meeting specific conditions. The conditions include annual due diligence, custody agreements, risk disclosures, and best interest determinations.
“This additional clarity was needed because state-chartered trust companies were not universally seen as eligible custodians for crypto assets,” Brian Daly, Director of the SEC’s Division of Investment Management, told Crypto In America host Eleanor Terrett.
“This is a staff letter, so at some point, this topic could be addressed by future rulemaking. We believe the market will benefit from having this guidance for today’s products, today’s managers, and today’s issues.”
Terrett explained that this “opens the door for more players in the crypto custody market as well as broader access for funds to custody crypto.” Players such as Coinbase and Ripple with custody through Standard Custody, BitGo, or Wisdom Tree, and others, “will be recognized as qualified custodians.”
Under the new @SECGov no-action letter, investment advisors can use Trust companies like Gemini as qualified custodians for crypto assets.
Amazing awaits! 🇺🇸
— GeminiTrustCo (@GeminiTrustCo) September 30, 2025
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SEC Chair Paul Atkins unveiled “Project Crypto” in July to dramatically lower regulatory burdens for the US crypto industry and to accelerate innovation and the integration of digital assets within the economy.
The Pushback Begins
SEC Commissioner Caroline Crenshaw strongly criticized the staff letter on state trust company crypto custody.
She claimed that the relief weakens investor protections by allowing state trust companies, which don’t meet traditional custody standards, to hold crypto assets, creating a dangerous precedent without proper justification or process.
“The statutes and rules regarding custody are what stand between American investors, on the one hand, and the risk of theft, loss, or misappropriation of their assets, on the other.”
Crenshaw, who has been vehemently anti-crypto in the past, argued that the relief lowers standards, creates unfair competition, crypto exceptionalism, and improper process.
“With limited factual support or legal analysis, this action bores a troubling hole in that regime – and I fear investors’ assets may fall through the cracks,” she concluded.
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