The Securities and Exchange Commission (SEC) has recently aligned its position with Wyoming’s regulatory framework regarding state-chartered trust companies. This decision marks a significant development for the digital asset industry.
Background on State Trust Companies
In July 2020, the Wyoming Division of Banking granted Two Ocean Trust, a state-chartered trust company, a novel “no-action” relief. This relief allowed Two Ocean Trust to store cryptocurrency assets for investment advisers and companies. The firm was the first of its kind to be recognized as a qualified custodian of digital assets.
SEC’s New Position
After nearly five years of ambiguity, the SEC has withdrawn its previous guidance from 2020, confirming that state-chartered trust companies can operate as qualified custodians under the Investment Company Act of 1940 and the Investment Advisers Act of 1940. The new No-Action Letter, dated September 30, 2025, establishes clear criteria for these entities.
Criteria for Qualified Custodians
The SEC specified that qualified custodians must meet the following requirements:
- Supervised by a state banking authority with custodial service authorization.
- Implement comprehensive policies to protect digital assets from theft or misuse.
- Provide annual audited financial statements.
- Include a recent internal control report from an independent public accountant.
- Enter into agreements preventing the commingling of custodial funds with the company’s assets.
Additionally, regulated entities must inform clients about the possible risks associated with using state trust companies for custody services.
Impact on the Digital Asset Industry
The SEC’s endorsement validates the framework established by Wyoming, which has emerged as a pioneer in digital asset custody regulation. Other states will likely look to this model as a reference for their own regulations.
The shift in SEC policy not only reinforces the role of state-chartered trust companies as custodians but also addresses the growing need for secure custody solutions in the expanding digital asset market. The decision aims to foster innovation while ensuring robust oversight and security measures are in place.
