In a significant regulatory development, the U.S. Securities and Exchange Commission’s Division of Investment Management has clarified its stance on cryptocurrency custody arrangements for investment advisers. The division issued guidance indicating it will not recommend enforcement actions against advisers who utilize state-chartered trust companies to safeguard digital assets on behalf of clients.
This regulatory position provides investment advisers with greater flexibility in selecting qualified custodians for cryptocurrency holdings, potentially expanding the range of institutional-grade custody solutions available in the digital asset space. The guidance specifically addresses concerns about compliance with the Investment Advisers Act of 1940, particularly rules governing client asset protection and custody requirements.
The announcement comes amid growing institutional interest in digital asset exposure and reflects regulatory recognition of evolving custody models within the cryptocurrency ecosystem. State trust companies, which operate under specific state banking regulations, now appear positioned to serve as viable custody partners for registered investment advisers seeking to incorporate digital assets into their service offerings.
This development marks an important step toward regulatory clarity for institutional cryptocurrency adoption while maintaining investor protection standards. The guidance provides investment advisers with additional confidence when evaluating custody solutions for client digital asset portfolios.
