SEC Clears Path for Crypto Custody via State Trust Firms

Written by Aaron S.,

Editor-In-Chief

Last Updated: October 01, 2025

Key Takeaways

The SEC will not pursue action against advisers using state trust companies to hold crypto, as long as key safeguards are followed;
State trust companies must have strong protections, and advisers must review them to ensure client interests are properly served;
Commissioner Hester Peirce stated that the decision reduces uncertainty for advisers and funds choosing crypto custodians.

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The US Securities and Exchange Commission (SEC) has provided new clarity for investment advisers looking to store cryptocurrency.

The SEC’s Division of Investment Management announced that it would not pursue enforcement actions against advisers who use state trust companies to hold digital assets, provided certain safeguards are followed.

This update was shared in a no-action letter sent in response to a request from law firm Simpson Thacher & Bartlett.

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The firm asked whether registered firms, like those in venture capital, could rely on state-chartered trust companies for crypto custody without facing penalties.

The SEC staff confirmed they would not object, as long as proper conditions were met.

For a state trust company to serve as a crypto custodian, it must have strong procedures to protect digital holdings. Advisers must also review the custodian's setup, confirm it serves the client’s interests, and meet specific oversight standards.

This update arrives as the SEC is already considering changes to custody rules. Currently, laws like the Investment Advisers Act and Investment Company Act require that approved custodians hold client funds, typically banks or similar institutions.

Commissioner Hester Peirce said the guidance removes uncertainty that advisers and funds have faced when selecting custodians for crypto assets. According to Peirce, this step helps both clients and fund investors by offering a clearer path forward.

On September 30, the SEC said the agency does not plan to bring cases against tokens connected to Decentralized Physical Infrastructure Networks (DePIN). What did Pierce say? Read the full story.