The U.S. Securities and Exchange Commission (SEC) has issued a no-action letter confirming that investment advisers can use state-chartered trust companies as qualified custodians for crypto assets under the Investment Advisers Act of 1940. This decision, in response to a formal request from Simpson Thacher & Bartlett LLP, provides long-needed regulatory clarity for digital asset custody. Registered investment advisers and regulated funds can now legally custody and manage cryptocurrencies like Bitcoin and Ethereum through state trust companies without fear of enforcement actions, provided they comply with relevant rules.