What is the Context of Rule 206(4)-2?

The application of Rule 206(4)-2 to digital assets has been a significant area of focus for the SEC, particularly concerning what constitutes "custody" of cryptocurrencies and which entities qualify as custodians. Discussions often involve the technical complexities of holding digital assets and the need for clarity on how existing regulations apply to this new asset class. A critical future development involves potential amendments or interpretive guidance from the SEC to address the unique characteristics of digital assets under this rule. News frequently covers the SEC's enforcement actions and policy statements related to investment advisers' digital asset custody practices.

Rule 206(4)-2

Definition

Rule 206(4)-2, also known as the Custody Rule, is a regulation under the Investment Advisers Act of 1940 issued by the U.S. Securities and Exchange Commission. It requires registered investment advisers who have custody of client funds or securities to implement specific safeguards. These safeguards include maintaining client assets with a qualified custodian, undergoing annual surprise examinations, and providing account statements to clients. The rule protects investors from fraud and mismanagement of their assets.

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∞Institutional Adoption

∞Architecture

∞Institutional Adoption Pathway

SEC Staff Permits State Trusts as Qualified Digital Asset Custodians

The Staff's no-action relief provides a critical compliance pathway, enabling SEC-registered investment advisers to utilize state-chartered trust companies as qualified digital asset custodians.

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∞Rule 206(4)-2

∞Asset Segregation

∞No-Action Letter

SEC Staff Clarifies Crypto Custody Rule for State Trust Companies

The SEC's no-action relief operationalizes the Custody Rule for RIAs, legitimizing state-chartered trust companies as qualified digital asset custodians under strict controls.

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∞Cold Storage Protocols

∞Risk

∞Asset Segregation

SEC Staff Expands Qualified Custodian Definition for Institutional Crypto Asset Custody

The No-Action Letter provides a crucial regulatory pathway for Registered Investment Advisers to custody digital assets with state-chartered trust entities.

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∞Digital Finance

∞Compliance Frameworks

∞Safekeeping Protocols

SEC Staff Confirms State Trust Companies Qualified Digital Asset Custodians

The SEC's no-action relief operationalizes institutional digital asset custody by clarifying the "qualified custodian" status for state-chartered trust companies.

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∞Institutional Crypto

∞Investment Fund

∞1940 Act

SEC Staff Expands Qualified Custodian Definition for Digital Assets

The SEC's custody clarification unlocks institutional capital by validating state-chartered trust companies as qualified custodians for crypto assets.

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∞Client Asset Segregation

∞Qualified Custodian Rules

∞Private Key Management

SEC Staff Confirms State Trust Companies Qualify for Institutional Crypto Custody

This SEC staff position operationalizes institutional crypto custody, providing RIAs and funds a clear compliance pathway for asset safeguarding.

∞State Trust Company

∞Securities Law

∞Fund Asset Protection

SEC Staff Permits Investment Advisers to Use State Trust Companies for Crypto Custody

This staff relief clarifies the qualified custodian standard for digital assets, immediately de-risking institutional RIA and fund custody operations.

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∞Asset Safeguarding

∞Registered Investment Adviser

∞Investment Adviser Compliance

SEC Staff Permits State Trust Companies as Qualified Crypto Custodians

This no-action relief provides essential clarity, expanding the qualified custodian universe for institutional digital asset strategies.