United States: No-Action Relief Issued for Crypto Custodied with State Trust Companies

By: Keri E. Riemer, Richard F. Kerr, and Win Gustin

On 30 September 2025, the SEC’s Division of Investment Management (Staff) issued a no-action letter confirming that, with respect to the placement and maintenance of crypto assets, it would not recommend enforcement action if investment advisers, registered investment companies and business development companies (BDC) treated as a “bank” (and thus permitted to custody assets) a trust company organized under state law that is (i) supervised and examined by a state authority with supervision over banks, and (ii) permitted to exercise fiduciary powers under applicable state law (State Trust Company). The relief is subject to various conditions, including the following:

• The adviser, fund or BDC has a reasonable basis, following due inquiry, for believing that, among other things, the State Trust Company is authorized to provide custody services for crypto assets and related cash and/or cash equivalents, and maintains policies and procedures designed to safeguard such assets;
• The adviser, fund or BDC enters into (or causes a client to enter into) a written custodial services agreement with the State Trust Company requiring such company to segregate the assets and prohibiting the company from lending, pledging or hypothecating such assets;
• Adequate disclosure is provided; and
• A determination is made that the provision of the State Trust Company’s custody services is in the best interest of the client, fund or BDC, as applicable.

The Staff noted that the applicant referred to State Trust Companies’ controls for ensuring the safekeeping of crypto assets, including so-called “deep” cold storage of crypto assets and encryption protocols and crypto asset movement verification controls. The Staff also noted that all requirements of (i) Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-2 thereunder, and (ii) Sections 17(f) and 26(a) of the Investment Company Act of 1940, and the rules thereunder, would continue to apply.