US SEC Clears Path for Ripple, Coinbase, and Bitgo to Act as Qualified Custodians for Crypto Assets
The US Securities and Exchange Commission has opened the door for Ripple, Coinbase, and Bitgo to act as qualified deposit banks for crypto assets.
On September 30, the Department for Investment Management of the SEC published a no-action letter in response to a request from Simpson Thacher & Bartlett LLP. This move enables investment advisors to use state trustees as custodian banks as part of the investment consultant Act from 1940 and the 1940 investment company.
Conditions for Qualification
In order to be justified, state trusts must be ruled by a US state authority, such as the Department of Banking in South Dakota or the Department of Financial Services in New York. Additionally, they must offer independent control reports, tested degrees that meet the Generally Accepted Accounting Principles (GAAP), and insurance agreements that prohibit the rehypothecation of customer assets without consent.
Other protective measures include keeping customer assets separate from the administrator’s balance sheet and enabling regular care tests, including surprise tests. Consultants also have to prove that the selection of such an administrator is in the best interest of customers or shareholders.
Effects on Large Crypto Companies
The letter clears a path for several companies that have already operated state trusts. The Coinbase Custody Trust Company in New York manages assets of over $90 billion, while the Bitgo Trust Company in South Dakota oversees $64 billion. Ripple can extend custody services associated with its institutional strategy via the Standard Custody & Trust Company acquired in 2023.
The decision provides long-awaited clarity in a space where crypto companies were often exposed to traditional custodian banks such as BNY Mellon or State Street. Analysts say that the move could expand the number of regulated options available to registered investment advisors and funds, making it easier for institutions to own digital assets and potentially leading to more money flowing into exchange-related funds and other regulated products.
According to a report by Crypto.News, this change could have significant implications for the crypto industry, allowing more institutions to participate in the market and increasing the demand for regulated crypto products. However, the relief is still limited to state trusts that meet the SEC requirements, and the landscape can be further changed through future regulatory developments.
For more information on this development, please visit the source link: https://crypto.news/sec-clears-path-ripple-coinbase-bitgo-custodians-2025/
