SEC Expands Crypto Custody to State Trusts: Bitcoin and Ethereum Regulation Update

The U.S. Securities and Exchange Commission (SEC) has opened doors for cryptocurrency custody services at state-chartered trust companies, including major platforms like Coinbase and Kraken. In a significant move, the SEC's Division of Investment Management issued a no-action letter, assuring that registered advisers and funds can securely hold digital assets such as Bitcoin (BTC) and Ethereum (ETH) with state trusts without facing enforcement actions. This decision marks a shift from previous restrictive proposals under former chairs, with current Chairman Paul Atkins prioritizing crypto-friendly policies. While not a formal rule, the letter alleviates compliance concerns and supports the growing crypto market, despite some opposition from commissioners who argue it creates regulatory disparities. The SEC continues to advance crypto regulations under Project Crypto, with formal rules expected soon, alongside congressional efforts to comprehensively regulate digital assets.