On September 30, 2025, the U.S. Securities and Exchange Commission (SEC) issued a no-action letter from its Division of Investment Management, stating it will not pursue enforcement against registered investment advisers and regulated funds using state-chartered trust companies as qualified custodians for crypto assets, provided specific safeguards are met, per . This guidance, responding to a query from Simpson Thacher & Bartlett LLP, clarifies that such trusts qualify as “banks” under the Investment Advisers Act of 1940 and Investment Company Act of 1940, resolving long-standing uncertainty, per . Commissioner Hester Peirce hailed it as a “significant step forward” in Project Crypto, while Caroline Crenshaw criticized it for potentially undermining federal oversight, per .
The letter allows advisers to custody Bitcoin (BTC), Ethereum (ETH), and other digital assets with state trusts like Coinbase Custody Trust Company or Anchorage Digital Bank, as long as they conduct annual due diligence, ensure asset segregation, and verify the trust’s state charter for crypto custody, per . This expands options beyond federally chartered banks, reducing barriers for institutional adoption, per . X posts from @martypartymusic celebrated it as “great news for crypto adoption,” predicting “many more crypto custodians,” while @CaitlinLong_ noted its alignment with Wyoming’s 2020 framework, per [post:0] and [post:5]. However, advisers must confirm no lending of client assets without consent, per .
This step, part of SEC Chair Paul Atkins’ Project Crypto initiative to lower burdens, could unlock $1T in institutional inflows by 2026, per . It contrasts with past SEC skepticism, like the 2020 withdrawal of a Wyoming custody statement, per . For Cardano (ADA) and BlockDAG (BDAG) holders, it eases custody for PUMP-related assets, potentially boosting liquidity, per. BTC ($114,573) and ETH ($4,143) saw minor gains post-announcement, with Fear & Greed Index at 42 (Neutral), per [post:2]. Critics like Crenshaw warn it favors state trusts over federal charters, potentially creating a “hodgepodge” of rules, per .
The letter paves the way for formal rulemaking, with Senator Cynthia Lummis praising it as recognizing state trusts’ role, per [post:20]. It could accelerate ETF approvals and DeFi integration, per . Investors should verify custodians via sec.gov and monitor Project Crypto updates. BTC support at $112,000 and ETH at $4,000 are key; dollar-cost average with stop-losses or diversify into USDC, per TradingView. Follow @TheBlock__ on X for developments. This clarity could drive $150,000 BTC by 2026, per Techopedia, but state-federal tensions persist, per .
