An important step has been taken by the US Securities and Exchange Commission (SEC) regarding cryptocurrency storage.
The SEC has issued a no-action letter stating that investment advisors can use state-chartered trust companies as “qualified custodians” for crypto assets.
Under the Investment Advisers Act of 1940, investors’ assets must be held in qualified custodians, such as banks or nationally chartered trust companies. The new guidance clarifies that state-licensed trust companies are also covered, giving investment advisors and registered funds a wider range of options for crypto asset storage.
“This additional clarity was necessary because state-licensed trust companies were not universally considered appropriate custodians for crypto assets,” said Brian Daly, Director of the SEC’s Office of Investment Management, in a statement. Daly argued that investment advisors could use these companies if they conducted due diligence and deemed it in the best interest of investors.
The decision paves the way for more companies to enter the crypto custody market. Companies like Coinbase, Ripple’s Standard Custody subsidiary, BitGo, and WisdomTree will now be recognized as qualified custodians.
Daly noted that this was merely a staff letter and that a formal regulation on the subject could be issued in the future, adding, “We believe the market will benefit from this guidance for today’s products, today’s managers, and today’s problems.”
*This is not investment advice.
