¶ 1101
Overview
Scope of the chapter. Chapter 9 compared custody models as arrangements of control, and chapter 10 examined the private-law character of a custodian's holding. This chapter turns to the institutions themselves. It asks which entities the law permits to hold digital assets for others, what each kind of entity must do to qualify, and what a client, a fiduciary or a fund gains or gives up by choosing one kind of institution over another. The answers come from several bodies of law that were written for different purposes and that do not always fit together: the custody provisions of the Investment Advisers Act of 1940 and the Investment Company Act of 1940, the customer-protection rule for broker-dealers, federal and state banking law, state trust-company statutes, the payment-stablecoin legislation of 2025, and the insolvency regimes that apply when an institution fails.
Why the institution matters. A customer who leaves digital assets with a third party bears two distinct risks. The first is operational: the custodian may lose the keys, suffer a theft or fail to process a withdrawal. The second is legal: if the custodian fails, the customer's claim may be a property claim to identified assets or an unsecured claim for their value. The charter under which the custodian operates bears on both. It determines who examines the custodian, what capital and controls it must maintain, whether customer assets must be segregated, which insolvency regime applies and whether the custodian can satisfy the regulatory requirements that bind the customer itself. An investment adviser, a registered fund and a trustee each have obligations that turn on the custodian's legal status, so the choice of institution is often a compliance decision as well as a commercial one.
The principal categories. Five categories of institution hold digital assets for others in the United States. National banks and federal savings associations may provide custody under authority the Office of the Comptroller of the Currency confirmed in 2020 and reaffirmed in 2025. National trust banks, a subset of national banks whose operations are limited to those of a trust company, hold custody under the same authority; several digital-asset firms received conditional approval of such charters in December 2025. State-chartered trust companies, organized under the trust-company statutes of states such as South Dakota, Nevada, New Hampshire, Wyoming and New York, became the dominant providers of institutional custody in the years when federal banking guidance discouraged bank participation. Wyoming's special purpose depository institutions combine a state bank charter with a statutory custody regime. Broker-dealers may hold digital assets that are securities under the customer-protection rule, subject to the conditions the Securities and Exchange Commission and its staff have set. Exchanges and other platforms that hold customer assets without any of these charters occupy a sixth position, governed principally by their terms of service and by state money-transmission or virtual-currency licensing.
The regulatory turn of 2025. The law in this area changed more in 2025 than in any earlier year. The OCC rescinded the supervisory non-objection requirement of Interpretive Letter 1179 in March 2025. The FDIC rescinded its prior-notification requirement the same month, and the Federal Reserve withdrew its supervisory letters on crypto-asset activities in April. The SEC staff rescinded Staff Accounting Bulletin No. 121 in January 2025, removing an accounting treatment that had made custody costly for public companies and banks. In June 2025 the Commission withdrew its 2023 proposal to replace the adviser custody rule. In September 2025 the staff of the Division of Investment Management issued a no-action letter allowing registered advisers and funds to treat qualifying state trust companies as banks for the custody of crypto assets. The GENIUS Act, signed in July 2025, limited who may hold payment-stablecoin reserves and the private keys used to issue payment stablecoins. In October 2025 the Tenth Circuit held that a Federal Reserve Bank may refuse a master account to a state-chartered digital-asset bank. Each of these developments is treated below.
Plan of the chapter. Paragraph 1110 sets out the layers of law that govern custody and the custody provision of the GENIUS Act. Paragraphs 1120 through 1140 examine the federal securities-law custody regimes: the adviser custody rule, the 2025 no-action letter on state trust companies and the position of registered funds and exchange-traded products, and broker-dealer custody. Paragraph 1150 treats banks and the federal banking agencies. Paragraph 1160 treats state charters, including Wyoming's custody statute and its special purpose depository institutions, New York's limited purpose trust companies and the insolvency of a Nevada trust company in In re Prime Core Technologies Inc. Paragraph 1170 examines access to Federal Reserve services through Custodia Bank, Inc. v. Federal Reserve Board of Governors. Paragraph 1180 addresses how fiduciaries and other holders should choose among institutions, and paragraph 1190 provides a due-diligence framework, a model custody provision and a checklist.
Currency of the law. Several of the sources examined here are staff statements and no-action letters. They express the views of the staff of a division, bind neither the Commission nor a court, and may be withdrawn. The federal banking agencies' interpretive letters can likewise be rescinded by a later Comptroller, as Interpretive Letter 1179 was. The chapter states the law as of November 2026 and identifies the date and status of each source so that readers can confirm whether it remains in effect.