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- SEC approves state trust companies as custodians for crypto assets.
- State-chartered trust companies can now hold digital currencies legally.
- Crypto firms gain clarity on managing digital assets safely.
The U.S. Securities and Exchange Commission (SEC) has officially approved state-chartered trust companies as qualified custodians for cryptocurrency assets. This is a significant victory for the cryptocurrency sector, as it offers the much-deserved regulatory clarity that companies dealing with digital currencies, such as Bitcoin and Ethereum, have long sought.
The SEC provided investment advisers with the opportunity to store and manage digital assets through state-chartered trust companies via its no-action letter to the Investment Advisers Act of 1940. These companies are able to handle cryptocurrencies like cash or cash equivalents.
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The new ruling removes legal ambiguity among financial institutions, which were previously under pressure in handling digital assets due to unclear rules.
State trust companies can now cooperate with registered advisers and regulated funds to securely store crypto assets. These trust firms are highly regulated and prepared to manage online assets, enabling crypto firms to operate with confidence.
That approval removes the possibility of enforcement action by the SEC, which had once loomed over the management of the digital currencies.
State Trust Companies Gain Recognition for Crypto Custody
The growing importance of states like Wyoming in cryptocurrency regulation is also noted in this ruling. In 2020, Wyoming became one of the earliest states to license state-chartered trust companies as custodians of crypto assets.
The recent ruling by the SEC recognizes the regulatory framework established by the state of Wyoming and provides federal recognition to the state’s efforts.
Cynthia Lummis, a senator who has been very active in crypto regulation, supported the SEC’s move. She attributed this federal recognition to Wyoming’s leadership in regulating digital assets.
The SEC has also provided more explicit guidance on how crypto firms can operate safely and confidently in the evolving market by formally acknowledging state-chartered trust companies as qualified custodians of cryptocurrency.
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