SEC No-Action Letter creates opening for more companies to serve as crypto stations

The US Securities and Exchange Commission said in a letter on Tuesday that it was not going to take action against registered investment advisers, emptents of cryptofonds and other entities for the use of trusts chartered by the state to keep digital assets.

The updated guidelines, a response from the SECs Division of Investment Management on a search that has been submitted by lawyers representing financial advisers, creates a potential opening for a larger number of organizations to serve as custodes for these assets, including affiliates of prominent crypto-oriented companies such as Coinbase and Ripple.

“Based on …. your letter would not recommend the division of investment management enforcement measures …. against a registered advisor or regulated fund for the treatment of a state of trust company as a ‘bank’ related to the placement and maintenance of crypto -activa and related cash and/or kasequivalent,” the SEC letter said, as long as certain.

The SEC letter offers the last shift of the less forgiving approach of the SEC for Crypto under former chairman Gary Genler, who limit the types of organizations that could limit digital assets.

In July the current chairman Paul Adkins “Project Crypto, a SEC initiative to dramatically lower the legal burden for the crypto industry and to accelerate the integration of digital assets within the traditional US economy.

The Investment Advisers Act of 1940 requires that advisers maintain customer assets with a bank, trust or other qualified custodian who owns national fiduciary tasks. Crypto supporters have used this legislation to enable a broader range of crypto initiatives.

The letter is not a formal rule or regulation and therefore has “no legal strength or effect” or “change or change applicable legislation”, the SEC noted.

But the Agency has made advisors responsible to ensure that a registered trust is authorized by relevant bank authorities to provide crypto guardianship and has written the policy and procedures to protect those assets, whereby issues are tackled as private key management.

Awareness agreements that advisers sign must also ensure that the trust will not borrow funds or otherwise used without the permission of a customer, and that crypto -activa “are separated from the assets of the state of Trustbedrijf.”

Trusts can serve as preservators, provided that “the registered adviser determines that the use of the guardianship services of the State Trust Company is in the best interest of the RIA clant or the regulated fund and its shareholders,” said the SEC letter.

The letter drew praise from Bloomberg ETF analyst James Seyffart, who wrote in an X Post that it was “an example of the textbook of more clarity for the digital assets room.”

“Exactly the kind of things that the industry asked for in recent years,” he wrote. “And it keeps coming.”