Qualified custodian definition refers to the legal and regulatory criteria that an entity must meet to be recognized as a qualified custodian for holding client assets. These criteria typically include capital requirements, insurance, and robust operational safeguards. This designation ensures a high standard of protection for investor funds.
Context
The discussion around the qualified custodian definition in the digital asset space is highly active, as regulators work to adapt existing financial laws to cryptocurrencies. A key debate involves whether traditional financial institutions or specialized crypto custodians are best suited to meet these requirements. Future developments will likely involve specific licensing and audit standards tailored for digital asset custody.
The No-Action Letter provides a crucial regulatory pathway for Registered Investment Advisers to custody digital assets with state-chartered trust entities.
This no-action relief operationalizes institutional crypto access by expanding the qualified custodian universe, mitigating a critical compliance bottleneck for RIAs.
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