Fiduciary authority in the context of digital assets refers to the legal power and obligation of an individual or entity to act in the best interests of another party concerning their digital holdings. This relationship demands a high standard of care, loyalty, and good faith. It typically applies to custodians, asset managers, or platforms that hold or manage crypto assets on behalf of clients. Exercising this authority involves safeguarding assets and making prudent decisions.
Context
The concept of fiduciary authority is gaining increasing relevance as traditional financial institutions enter the digital asset space, offering custodial and management services. Key discussions revolve around how existing fiduciary duties apply to novel digital asset structures, particularly in decentralized or self-custodial scenarios. Regulatory bodies are actively working to define the scope and responsibilities associated with holding or controlling digital assets for others.
The SEC Staff's No-Action Letter permits RIAs and Regulated Funds to use State Trust Companies as Qualified Custodians for digital assets, structurally de-risking institutional adoption.
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