Overview

• The Division of Investment Management issued a late‑September no‑action letter allowing registered advisers and regulated funds to treat qualifying state‑chartered trust companies as banks for holding crypto assets and related cash.
• Firms must verify state authorization, review audited financial statements and SOC internal control reports, assess private‑key and cybersecurity policies, and repeat this diligence annually.
• Written custodial agreements must bar rehypothecation without prior written consent and require full segregation of client assets from the custodian’s own assets.
• Advisers and funds must disclose material risks to clients or boards and determine the arrangement is in clients’ or shareholders’ best interests before using these custodians.
• The assurance is staff‑level and non‑binding, does not expand the definition of a qualified custodian, drew support from Hester Peirce and criticism from Caroline Crenshaw, and may broaden practical custody options as participants seek clearer rules.