April 25, 2025/US SEC

By Commissioner Mark T. Uyeda

Good afternoon, and welcome to the Crypto Task Force’s third roundtable, which is focused on custody.

Proper custody of client and customer assets have been a key protection under the federal securities laws. Crypto is not any different in principle. As Commission registrants increasingly engage with crypto assets, it is important that they have access to a number of custodial solutions that comply with applicable laws and regulations.

While the Office of the Chief Accountant recently removed a significant barrier for companies seeking to offer crypto asset custodial services by withdrawing Staff Accounting Bulletin No. 121,[1] there is still work to do to ensure appropriate choice among custodial solutions.

For example, the Commission should consider whether it is clear that registered investment advisers[2] can use state-chartered limited purpose trust companies to custody crypto assets as fiduciaries as qualified custodians in compliance with Rule 206(4)-2 under the Advisers Act (known as the “Custody Rule”).[3]  Limited purpose trust companies with the authorization of a state banking regulator, such as the New York State Department of Financial Services or the California Department of Financial Protection and Innovation, might be able to custody crypto assets as fiduciaries arguably “exercise fiduciary powers similar to those permitted to national banks” under the authority of the Office of the Comptroller of the Currency (“OCC”).[4] 

With respect to federally-chartered banks, the Office of the Comptroller of the Currency issued interpretive letters recognizing that national banks may custody crypto assets as a fiduciary under the National Bank Act and authorized multiple national banks to do so.[5]  Given the historical approach of permitting state-chartered banks to compete with federally-chartered banks, the Commission should consider allowing advisers to use state-chartered limited purpose trust companies, with the fiduciary power to custody crypto assets, as qualified custodians.

The Commission could also consider further steps to enhance competition by modifying or sunsetting the Commission’s “special purpose broker-dealer” regime,[6] providing interim guidance that explains how firms can custody non-security crypto assets, crypto asset securities, and traditional securities in compliance with the capital and customer protection rules, and ultimately codifying this guidance in amendments to these rules.[7]

Separately, the position of the prior administration that “most crypto assets” are likely to be funds or securities has led many advisers to shoehorn all client crypto assets into qualified custody, and thereby forego certain investment opportunities that are incompatible with these custodial arrangements.[8]  I agree with Commissioner Peirce that a large number of crypto assets are not securities.[9]  But the term “funds” is not defined in the Custody Rule and the Commission may need to clarify whether any crypto assets constitute “funds” for purposes of the rule.

Thank you to the Crypto Task Force and panelists for your time in preparing for this roundtable.  I look forward to the discussions to follow.