The SEC just made life a lot easier for some major crypto companies. On September 30th, they issued a no-action letter that basically gives Ripple, Coinbase, and BitGo the green light to serve as qualified custodians for crypto assets held by investment advisers.
This is actually a pretty big deal because these firms have been operating state-chartered trust companies but weren’t officially recognized as proper custodians under the Investment Advisers Act, but now they are, as long as they providing audited financials.
The numbers involved here are massive. Coinbase Custody Trust manages over $90 billion in assets, while BitGo Trust in South Dakota oversees $64 billion. Ripple got into the custody game when they acquired Standard Custody & Trust Company back in 2023.
Before this guidance, crypto firms were basically playing second fiddle to traditional custodians like BNY Mellon and Fidelity. Investment advisers who wanted to hold crypto for clients often had limited options, which slowed down institutional adoption.
The relief only applies to state-chartered trusts that meet specific SEC requirements, including keeping client assets off their balance sheets and allowing surprise audits. But analysts think this could drive more institutional money into crypto ETFs and other regulated products now that there are more custody options available.
Conclusion
This SEC move marks a turning point for crypto custody, leveling the field with traditional players and potentially accelerating institutional adoption through greater trust, compliance, and expanded options for investment advisers.
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