Thirteen of the 40 virtual-currency entities on the New York Department of Financial Services’ licensee list hold a New York limited purpose trust charter — the status the Securities and Exchange Commission’s staff leaned on when it opened the door to state trust companies holding adviser and fund crypto in September 2025. The other 27 hold BitLicenses or money transmitter licences, which are not bank charters, and an entity that is not a bank is not a qualified custodian. The institutional custody bottleneck is not a technology problem. It is a chartering problem, and the rule written to fix it no longer exists.
Most desks are working from stale information here. The Safeguarding Advisory Client Assets proposal — the overhaul published in the Federal Register on March 9, 2023 that would have replaced the Advisers Act custody rule and written digital assets into it explicitly — was formally withdrawn on June 17, 2025. The Commission said it “does not intend to issue final rules with respect to these proposals,” and that any future action would need a new proposal. The operative law is therefore Advisers Act Rule 206(4)-2, whose qualified custodian definition at paragraph (d)(6) still reads as it did before Bitcoin had an exchange-traded product: banks and savings associations, registered broker-dealers, registered futures commission merchants and certain foreign financial institutions.
Why crypto breaks the definition
Rule 206(4)-2 assumes an intermediary holding an asset in an account, but a bearer instrument settled on a public ledger has no account — it has a key. Multi-party computation and multi-signature arrangements split that key across several parties, none of whom individually has the “possession or control” the rule contemplates. Staked assets sit with a validator rather than a custodian, and collateral posted to a decentralised finance protocol is arguably in nobody’s custody at all. Segregation and insolvency duties, meanwhile, were drafted for omnibus securities positions, not commingled on-chain balances.
Who actually holds the mandates
The labels are not interchangeable. Coinbase Custody Trust Company has held a New York limited purpose trust charter since October 2018, BitGo New York Trust Company since March 2021, Gemini Trust Company since October 2015 and ICE Digital Trust since August 2019 — the licence behind its bid for exchange-traded fund custody mandates; Circle Internet Trust Company joined only in July 2026. Anchorage sits in a different category: the OCC conditionally approved the conversion of Anchorage Trust Company, a South Dakota chartered trust company, into Anchorage Digital Bank, National Association on January 13, 2021 — a national trust bank bound by an enforceable operating agreement. Its New York affiliate holds only a virtual currency licence. BNY Mellon, by contrast, is a national bank that never needed a crypto-specific charter and has extended custody into staking.
Commissioner Hester Peirce, welcoming the September 2025 relief, named the problem: advisers were “caught up in a guessing game as to whether their entity of choice for crypto asset custody, which also may be the only available custodian for such service, is a permissible custodian.” She was explicit that the letter “does not expand the definition of a permissible custodian.” Commissioner Caroline Crenshaw dissented, warning that “degrading our custody framework is a serious matter” and that the staff was “poking holes in core statutory protections” for custodians who “seem readily to admit they do not meet the current standards of our custody regime.”
Three doors are now open, and none is the custody rule. The federal one runs through the OCC, where 15 digital-asset charter applications were pending on the regulator’s tracker — the oldest filed January 6, 2026, the newest July 28, 2026, and including Payward National Trust Company, Morgan Stanley Digital Trust and Bastion Platforms National Trust Company, which already holds the New York charter and now wants the federal upgrade. The state door runs through NYDFS and its 13 charters. The third is the broker-dealer route, which the rule has always permitted and which the SEC’s Division of Trading and Markets addressed on December 17, 2025; Copper Markets (US) Inc. confirmed on August 12, 2026 that it had become a FINRA member and SEC-registered broker-dealer, and intends to offer qualified custody on that basis.
The rulebook will not catch up soon. The one crypto item on the Commission’s calendar this week — an open meeting set for August 14 — concerned a tailored offering regime for crypto investment contracts, not custody, and appears on the SEC’s meetings page as cancelled. Until Congress settles the market-structure question, qualified custodian status will keep being conferred by charter grants and staff letters rather than by rule, leaving fund boards to diligence licences one by one. Just as registered is not regulated, chartered is not chartered alike — and a no-action letter, unlike a rule, can be withdrawn by the staff that issued it.
This article is informational analysis only and is not financial, investment, or trading advice. Cryptocurrencies are highly volatile and can lose substantial value rapidly. Past performance and historical patterns do not guarantee future results. Do your own research and consult a regulated financial adviser before making any investment decision.
Karthik Subramanian
Karthik Subramanian is a founder, writer, and technology consultant with nine years in the crypto ecosystem. He covers token economics, L1/L2 infrastructure, DeFi protocols, wallets/custody, and the bridge between crypto and forex—broker technology, liquidity, and macro drivers. Karthik’s writing focuses on clear, practical frameworks that help professionals evaluate new products and on-chain innovation alongside FX market realities.
