3 recorded changes
Want your article here?
Promote with Leviathan NewsOn 30 September 2025, the SEC’s Division of Investment Management issued a no‑action letter to law firm Simpson Thacher & Bartlett confirming that state‑chartered trust companies can be treated as “banks” and thus qualified custodians for certain crypto assets and related cash under the Investment Advisers Act of 1940 and the Investment Company Act of 1940, subject to detailed conditions. The staff said it would not recommend enforcement against registered investment advisers (RIAs) or regulated funds (registered investment companies and business development companies) that maintain eligible crypto assets and related cash or cash equivalents with qualifying state trust companies, provided advisers and funds meet specific due‑diligence, contractual, and disclosure requirements. The relief is narrow but significant for the asset‑management and crypto‑custody markets. It allows advisers and funds to use state trust companies—already major providers of crypto custody—as permissible/qualified custodians for crypto assets that fall within the custody provisions of the Advisers Act and 1940 Act, including certain tokenized securities, while reinforcing investor‑protection expectations. To rely on the letter, advisers must verify that the state trust company is properly authorized by its state banking regulator to custody crypto assets, review audited financials and internal control reports, enter into written custody agreements that require segregation of client assets and prohibit rehypothecation without consent, disclose material risks, and determine that using the trust company is in clients’ or shareholders’ best interests. SEC Commissioner Hester Peirce welcomed the move as clarifying the use of state trusts operating under robust regulatory frameworks, while Commissioner Caroline Crenshaw highlighted concerns about entrusting nationwide crypto custody to entities that are not federally chartered banks, underscoring ongoing policy debate around crypto‑asset safekeeping. "entities":["U.S. Securities and Exchange Commission (SEC)","Division of Investment Management (SEC)","Simpson Thacher & Bartlett LLP","state‑chartered trust companies","registered investment advisers (RIAs)","registered investment companies","business development companies (BDCs)","Investment Advisers Act of 1940","Investment Company Act of 1940","Hester M. Peirce","Caroline A. Crenshaw","Staff Accounting Bulletin No. 121","national banks","state banks","crypto assets","tokenized securities"]}`
AI-generated background, compiled from web sources — not editorial content.
🚀 Love DeFi? Ready to dive in and start earning $SQUID while making an impact?