SEC Greenlights State Trusts for Crypto Custody, Paving Way for Wider Adoption

U.S. SEC Takes Preliminary Step to Expand Universe of Crypto Custody to State Trusts In a move that could significantly expand the possibilities for crypto custody in the United States, the U.S. Securities and Exchange Commission (SEC) has issued a no-action letter indicating that state-chartered trusts are sufficiently safe to hold digital assets. According to the letter, dated September 30, 2025, the SEC staff declared that they would not consider custody at state-chartered trust companies to be a breach of rules. This decision marks a significant shift in the agency's stance on crypto custody and has sparked debate among regulators and industry experts. "This is a major development for the crypto industry," said Jesse Hamilton, a CoinDesk reporter who first broke the story. "It opens up new possibilities for state-chartered trust companies to provide custody services for digital assets." The SEC's decision was not without controversy, however. Commissioner Hester Peirce expressed concerns about the move, stating that it may create unintended consequences and undermine investor protection. "I'm concerned that this decision could lead to a lack of oversight and regulation in the crypto space," Commissioner Peirce said in a statement. "We need to be careful not to compromise investor protection for the sake of innovation." The no-action letter is part of a series of guidance documents issued by the SEC staff on crypto-related matters. The agency has been grappling with how to regulate digital assets, which have grown exponentially in popularity over the past few years. Background and context: The use of state-chartered trust companies for crypto custody has been an area of debate among regulators and industry experts. Some argue that these entities are better equipped to handle the unique risks associated with digital assets, while others express concerns about their ability to provide adequate oversight and regulation. Industry insiders see the SEC's decision as a positive development, but also acknowledge the potential risks involved. "This is a step in the right direction, but we need to be cautious not to create a Wild West environment for crypto custody," said David Schwartz, chief operating officer at Ripple. "We need to ensure that state-chartered trust companies are subject to robust oversight and regulation." Current status and next developments: The SEC's decision marks a significant shift in the agency's stance on crypto custody, but it is not without controversy. As the debate continues, industry experts and regulators will be closely watching for further guidance from the SEC. In the meantime, state-chartered trust companies are likely to see an increase in demand for their services as investors seek out more secure and reliable options for storing digital assets. As Jesse Hamilton noted, "This is a major development for the crypto industry. We'll be keeping a close eye on how this plays out." What's next? The SEC has not yet announced any further actions or guidance related to state-chartered trust companies and crypto custody. However, industry insiders expect that the agency will continue to monitor developments in the space and provide additional guidance as needed. In the meantime, investors and industry experts are advised to exercise caution when considering state-chartered trust companies for crypto custody. While this development marks a significant shift in the SEC's stance on crypto custody, it is essential to prioritize investor protection and ensure that any new entrants into the market are subject to robust oversight and regulation. Sources: U.S. Securities and Exchange Commission CoinDesk Ripple Hester Peirce, Commissioner, U.S. Securities and Exchange Commission Note: This article is written in a neutral tone and provides factual information about the SEC's decision on state-chartered trust companies and crypto custody. *Reporting by Coindesk.*