A public statement issued by a staff member from the SEC indicates that the regulatory body is evaluating the definition of the qualified crypto custodians. In a conventional sense, the term is usually applied to banks, brokerages, and futures commission merchants. However, the Wyoming Division of Banking has applied to Ocean Trust, a wealth management firm. The move signifies that Wyoming rules on crypto adoption keep only getting innovated. On SEC Qualifying Crypto Custodians The public statements from SEC’s Division of Investment Management have revealed that the firm is looking into which institutional firms can qualify as crypto custodians for its client funds. The recent statement comes from a no-action letter from the Wyoming Division of Banking to state-chartered public trust company Two Ocean Trust. According to the letter, Two Ocean is qualified as a qualified custodian and eligible to provide custodial services for digital assets under Wyoming law, including virtual currency and digital (tokenized) securities. Although, the Wyoming letter did not confirm whether all on-depository trust companies are banks or qualified custodians. However, it did mention that Two Oceans falls under the definition of banks according to the Investment Advisers Act of 1940. This signifies that these firms need to get registered with the SEC as well as the new SEC Custody Rule. Investment Advisors Can Now be in Crypto Custody too According to the SEC, qualified custodians traditionally include “banks, registered broker-dealers, and registered futures commission merchants,” which are all subject to extensive regulation and oversight. If SEC’s public statement comes into legislation in full effect, it could let traditional registered investment advisors get fully involved with crypto custody. The SEC’s letter further asks the public to ask questions that one may have doubts such as who’s been left out of the qualified custodian definition that should be in? Who’s in who should be out? Do state-chartered trust companies like Two Ocean have the same characteristics as banks?
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