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Custody Rule 206

Definition ∞ Custody Rule 206 refers to a US Securities and Exchange Commission regulation concerning client asset safekeeping. Specifically, Rule 206(4)-2 under the Investment Advisers Act of 1940 mandates registered investment advisers to maintain client funds and securities with qualified custodians. This rule imposes specific requirements for independent verification and reporting to protect investor assets. Its application to digital assets remains a significant point of discussion and regulatory guidance.
Context ∞ Custody Rule 206 is a recurring topic in crypto news, particularly as the SEC seeks to apply existing securities regulations to digital asset markets. Investment advisers dealing with cryptocurrencies face compliance challenges regarding what constitutes a qualified custodian for digital assets. Ongoing regulatory updates and industry advocacy focus on clarifying how this rule applies to various digital asset custody solutions, impacting institutional participation in the crypto space.

A futuristic, metallic device with an open casing reveals intricate, glowing blue circuitry, suggesting active blockchain node operations. White, cloud-like material is integrated within the central processing core and around the exterior, possibly indicating an advanced cooling mechanism for high-intensity hashing power or a representation of cold storage for digital assets. This visualizes the complex decentralized ledger technology DLT infrastructure essential for transaction validation and maintaining network integrity through robust cryptographic primitives.

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SEC Staff Permits State Trust Companies as Qualified Crypto Custodians

Institutional investors gain critical operational clarity as the SEC affirms State Trust Companies satisfy Qualified Custodian requirements for digital assets.