The SEC now allows state-chartered trust companies to provide crypto custody without fear of enforcement actions.
- •This regulatory relief encourages traditional financial advisers to integrate digital assets, fostering institutional adoption.
- •It also supports growth in the custodial crypto market, projected to expand from $2.9 billion in 2024 to $7.7 billion by 2032, while opening space for new entrants and innovative financial products.
Over the past several months, the U.S. Securities and Exchange Commission (SEC) has taken significant steps toward embracing crypto within mainstream finance. By providing clarity for state-chartered trust companies, the SEC is enabling a smoother path for advisers and institutional investors to engage with digital assets safely.
SEC OFFERS NO-ACTION RELIEF
The SEC recently issued no-action relief, confirming that advisers using state-chartered trusts to custody crypto assets will not face enforcement actions. This guidance came following requests from law firms advocating for clarity on venture capital practices involving digital assets. While non-binding, it signals a shift toward supportive policies for the integration of crypto in regulated financial frameworks.
SEC Commissioner Hester Pierce commented that the move reduces uncertainty for advisers navigating complex regulatory areas. She highlighted that the guidance covers not only crypto holdings but also tokenized securities, expanding potential applications for institutional clients.
MARKET EXPANSION AND INSTITUTIONAL OPPORTUNITIES
The custodial sector, historically dominated by a handful of firms such as Coinbase, Anchorage, BitGo, Fireblocks, and Fidelity, stands to benefit from this regulatory clarity. While these companies currently hold the majority of assets under custody, the SEC’s approach is expected to encourage new participants, fostering competition and innovation in a market projected to grow from $2.9 billion in 2024 to $7.7 billion by 2032.
Custody services are evolving beyond safekeeping, with providers now offering products built around client assets. Coinbase, for instance, has reported over $1 billion in Bitcoin-backed loans within eight months, reflecting strong demand and the maturation of the crypto financial ecosystem.
REGULATORY CLARITY SPURS NEXT-GENERATION CRYPTO SERVICES
This development is more than regulatory reassurance. It positions state-chartered trusts as a foundation for the next wave of institutional crypto offerings. With legal certainty, advisers can confidently integrate digital assets, creating opportunities for innovative lending, tokenized investments, and other financial products.
The SEC’s guidance marks a turning point for crypto custody, expanding market access and encouraging new entrants to participate in an evolving financial landscape. By supporting growth and clarity simultaneously, the agency is helping bridge traditional finance with the fast-growing digital asset ecosystem.