- SEC guidance now permits advisers to use state trust companies to custody digital assets securely.
- State-chartered trust firms like Coinbase and BitGo may now qualify to hold crypto for clients.
The U.S. Securities and Exchange Commission (SEC) has issued a no-action letter stating that investment advisers may use state-chartered trust companies to hold crypto assets on behalf of clients. The guidance, released on September 30, 2025, provides clarification under the Investment Advisers Act of 1940, which requires that client assets be kept with a qualified custodian.
🚨BREAKING: The @SECGov has issued a no-action letter saying that investment advisers can use state-chartered trust companies as qualified custodians for crypto assets.
What does this mean?
Under the Investment Advisers Act of 1940, advisers must keep client assets with a…
— Eleanor Terrett (@EleanorTerrett) September 30, 2025
Traditionally, qualified custodians have included national banks or trust companies with federal fiduciary powers. With this update, certain state-chartered trust companies may now be treated the same, as long as advisers conduct a full review and determine that the arrangement serves the interests of clients or regulated funds.
“This additional clarity was needed because state-chartered trust companies were not universally seen as eligible custodians for crypto assets,” said Brian Daly, Director of the SEC’s Division of Investment Management.
Meanwhile, the decision allows a wider group of companies to offer custody services for digital assets. Organizations such as Coinbase, Ripple (through Standard Custody), BitGo, and WisdomTree are among those now considered eligible to serve as custodians, provided they meet the required conditions.
Under the new guidance, advisers must confirm that the selected trust company is capable of safeguarding digital assets in a secure and compliant manner. The determination must be based on the best interest of the adviser’s client or the fund and its shareholders.
Although the guidance does not represent a rule change, it removes regulatory uncertainty. Daly noted,
“We believe the market will benefit from having this guidance for today’s products, today’s managers, and today’s issues.”
Response from Industry and Lawmakers
The no-action letter follows a formal request submitted by law firm Simpson Thacher & Bartlett LLP, asking the SEC not to pursue enforcement against advisers and funds that use state trust companies for digital asset custody.
Senator Cynthia Lummis of Wyoming responded to the news on X, writing,
“Encouraged to see @SECGov recognizing state-chartered trust companies as qualified digital asset custodians. WY paved the way in 2020 by issuing landmark no-action relief.”
The letter also received support from financial analysts. Bloomberg ETF analyst James Seyffart wrote,
“This is a textbook example of more clarity for the digital asset space. Exactly the sort of thing the industry was asking for over the last few years.”
Wyoming was among the first states to create a regulatory path for state trust companies to custody crypto. Its early framework faced skepticism from federal regulators at the time. With the SEC’s recent letter, that model is now being acknowledged as a valid approach.
Conditions for Custody Arrangements
Trust companies with custody arrangements have to meet certain standards. These consist of the segregation of client crypto assets from company-owned assets, and an explicit requirement whereby funds cannot be borrowed or used without the client having consented in writing beforehand.
The no-action letter states that investment advisers must ensure that the trust company operates in a manner consistent with safeguarding clients. The trust company should maintain systems to protect digital assets and guarantee the proper conduct of transactions.
While the letter reflects staff position and is not binding as law, it does provide a framework upon which advisers may rely for the present. Formal rulemaking on this issue, however, may still be considered by the agency in the future.
Separately, the SEC has temporarily halted trading in shares of QMMM Holdings. The suspension began on September 30 and is scheduled to remain in effect until October 13.
