Well, well, well. The SEC staff-yes, the same folks who usually treat crypto like it’s a suspicious casserole at a potluck-have decided that investment advisers can use state trust companies to custody crypto assets. 🎉
In a shocking twist (that no one saw coming except everyone), the SEC’s Division of Investment Management dropped a no-action letter like it’s a mic at a karaoke bar. Translation: “We won’t sue you… probably.”
Law firm Simpson Thacher & Bartlett, clearly tired of playing regulatory roulette, asked the SEC for some reassurance that venture capital firms wouldn’t get slapped with fines for holding crypto. Because nothing says “trust us” like a legal disclaimer.
This is the SEC’s second no-action letter this week, which either means they’re feeling generous or they’re just really into paperwork. Either way, it’s a sign of their “hands-off” approach under the Trump administration-because nothing says “deregulation” like passive-aggressive bureaucracy.
Interim Step or Just Kicking the Can Down the Road?
The SEC’s letter basically says state trust companies can babysit your crypto, as long as they pinky-promise to keep it safe. Advisers and fund managers must also perform due diligence, which, let’s be honest, is just corporate-speak for “Google them first.”
Brian Daly, director of the Division of Investment Management, called this an “interim step to modernization.” Translation: “We’re not ready to commit, but here’s a consolation prize.”
“This relief unlocks a larger universe of crypto custody options, subject to important safeguards.”
Translation: “You can play with more toys now, but we’re still watching you.”
Peirce Cheers, Crenshaw Side-Eyes
SEC Commissioner Hester Peirce (aka “Crypto Mom”) was thrilled, saying this move stops the “guessing game” advisers have been forced to play. Because nothing says “regulatory clarity” like a vague no-action letter.
“This moment also presents us with an opportunity to consider whether the custody requirements should be improved and modernized.”
Translation: “We’re still figuring this out, but here’s a Band-Aid.”
Bloomberg ETF analyst James Seyffart called it a “textbook example of clarity.” Meanwhile, crypto trader Marty Party predicted this would lead to “many more crypto custodians,” which is either great for adoption or just more middlemen taking a cut. 🤷♀️
But SEC Commissioner Caroline Crenshaw (the lone Democrat) was not amused, calling the letter “troubling” and accusing it of unfairly favoring state trust companies. Because nothing unites Washington like bureaucratic infighting.
“Deciding whom to trust as a custodian is a high-stakes and important question.”
Translation: “We’re still not sure about this whole ‘crypto’ thing.”
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2025-10-01 06:25