SEC Letter Could Allow State Trusts to Custody Digital Assets, Potentially Impacting XRP Custody by Coinbase and Ripple

The SEC’s Division of Investment Management said it does not plan to take enforcement action against registered advisers or regulated funds that use state-chartered trusts as custodians for crypto assets, provided the trust meets banking authority oversight and written custody ￰0￱ opens custody options beyond banks for crypto funds. State-chartered trusts can serve as qualified custodians for crypto when authorized and properly ￰1￱ must verify regulatory authorization, segregation of assets, and written private key ￰2￱ analyst praise and SEC language suggest broader industry adoption potential; official SEC letter remains ￰3￱ guidance on state-chartered trust custody opens new custodian options for crypto funds—learn what advisers must verify to use these trusts today. , "description": "The SEC Division of Investment Management said it would not recommend enforcement action against advisers using state-chartered trusts as custodians for crypto assets if specific safeguards are met.", , "publisher": What does the SEC letter say about state-chartered trust custody for crypto?

SEC guidance on crypto custody states the Division of Investment Management will not recommend enforcement action against Registered Advisers or Regulated Funds that treat a state-chartered trust as a “bank” for placement and maintenance of crypto assets, provided the trust is authorized by banking authorities and maintains written policies for custody and private key ￰4￱ must advisers verify a state trust to use it as a qualified custodian? Advisers must confirm the state trust is authorized by the relevant banking regulator to provide crypto custody ￰5￱ should review written policies on private key management, segregation of client assets, and contractual guarantees that the trust will not lend or use client funds without consent. , The SEC letter is an interpretive response and does not create binding ￰6￱ memorandum clarifies enforcement priorities but leaves the ultimate legal standards of the Investment Advisers Act of 1940 ￰7￱ does this matter for crypto firms and custodians?

Opening custody to state-chartered trusts could broaden the pool of qualified custodians beyond national ￰8￱ potentially allows affiliates of crypto-native firms and specialized trust companies to custody assets for registered products when they meet oversight and policy ￰9￱ conditions did the SEC emphasize in the letter? The SEC emphasized that custodial agreements must ensure segregation of crypto assets, explicit limits on use of funds, documented private key controls, and that the adviser determines the trust arrangement serves client ￰10￱ agency reiterated the letter has “no legal force or effect.” Frequently Asked Questions , What do industry observers say?

Bloomberg ETF analyst James Seyffart praised the letter as added clarity for the digital asset ￰11￱ commentary from major crypto firms such as Coinbase and Ripple (plain text mentions) indicates the guidance could increase custodial ￰12￱ Takeaways Regulatory clarity : The SEC letter signals tolerance for state-chartered trust custody when safeguards are ￰13￱ responsibility : Registered Advisers must verify authorization, policies, and contractual protections. Non-binding guidance : The letter is interpretive and does not change statutory legal obligations; due diligence remains ￰14￱ The SEC’s interpretive letter provides practical guidance on using state-chartered trusts as custodians for crypto assets and may expand custodian options if trusts meet oversight and custody ￰15￱ should document their due diligence and ensure contractual protections; market adoption will depend on state authorization and robust custody controls.