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Ripple, Coinbase, and other digital asset companies have qualified as cryptocurrency administrators after the Securities and Exchange Commission (SEC) issued a no-action letter to enable the Securities and Exchange Commission (SEC) to use the state’s chartered trust companies to hold their clients’ assets.
in letterthe SEC’s investment management department said it would not recommend that the agency take enforcement action if the advisor uses a state trust company as a crypto manager.
It was in response to a letter Sent by law firm Simpson Thatcher and Bartlett. This sought assurance that if a registered company began to retain crypto for its clients, it would not be subject to enforcement action from the SEC.
A letter sent to the SEC seeking warranty (Source: SEC)
New guidance clarifies the definition of banks and gives clear requirements
Guidance from SEC staff provided the crypto industry with some clarifications regarding the definition of “banks” under the Investment Advisory Act of 1940 and the Investment Companies Act of 1940.
Brian Daly, director of the SEC division, said: “Additional clarity of the state’s distinctive trust companies were not universally seen as eligible custodians in crypto assets, so additional clarity was needed.
Ripple, Coinbase, and several other crypto companies operate as state-characterized trust companies, but previously faced questions about eligibility based on custody requirements.
In response, the SEC department confirmed that state trust companies such as Ripple and Coinbase could be used as administrators. Daly believes it will unlock “the bigger universe of crypto custody options.”
However, these companies must implement procedures designed to protect client encryption.
Additionally, advisors and fund managers must follow certain criteria, including carrying out due diligence, such as reviewing audited financial statements prepared under GAAP and internal control reports from independent accountants.
Advisors should also determine whether it is in the best interest of the client for a company to detain crypto.
A detention agreement must prohibit cryptocurrency loans, pledges or restructuring without the client’s consent. Another key requirement is that the client’s digital assets are separated from the custodian’s balance sheet.
That final requirement addresses some of the main reasons for the biggest collapse in the history of code over the years. One of these collapses was the collapse of Crypto Exchange FTX. This allowed sister trading company Alameda to use customer funds for investments, risky transactions and other obligations.
Another example was the Celsius Network, with contract terms for the “earning” program, which transferred the title to the assets to Celsius. The company was then free to lend, reimpose, and dedicate money.
Though praised by some, advances in sustainability and regulation are still questioned
Several crypto industry figures say new guidance from the SEC is a step in the right direction.
SEC Commissioner Hester Peirce, who has earned the nickname “Crypto Mom” for his advocacy of digital assets I said It is being caught up in the fact that new guidance is “too long” to put an end to a “speculation game” in which advisors and regulated funds are registered.
She went on to say that non-action letters are “encouraging developments” because of registered advisors and funds they want to invest in cryptography.
Similarly, Wyoming Sen. Cynthia Ramis said she was “encouraged” by development, pointing out that the former Joe Biden administration accused her state of making similar moves in 2020.
Bloomberg ETF analyst James Sefert also praised the decision.
“This is a clearer example of textbooks for the digital asset space,” he said in X.
This is an example of a textbook of clarity in the digital asset space. It’s exactly like the industry has been looking for over the last few years. And it continues to come.
– James Seyfert (@jseyff) September 30, 2025
“It’s like the industry has been asking for over the past few years, and it’s going to come,” he added.
One X user commented under Seyffart’s post, questioning whether the new guidance was “actually sticky” and whether it would disappear if a new SEC chair was selected. A Bloomberg analyst replied, “That’s the start.”
Another X user expressed dissatisfaction with how the new cryptography and guidance was issued by US regulators, claiming that the regulator is “failing.”
Seyffart responded that X users “a severely underestimate how slow the government can travel,” and that they compared the size and speed of regulators to the size of aircraft carriers. Compared to standard government movement standards, US regulators “turn on DIME” in their crypto policy, Seyffart said.
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