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- SEC grants no-action relief for crypto custody via state-chartered trusts.
- Custody market projected to jump from $2.9B to $7.7B by 2032.
- Coinbase loans surpass $1B, highlighting growing institutional adoption.
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The U.S. Securities and Exchange Commission (SEC) has made a historic pivot in crypto regulation over the past nine months, signaling growing support for digital assets within traditional finance. By offering clearer guidelines and no-action relief for advisers using state-chartered trust companies to custody crypto, the SEC is paving the way for institutional adoption and market expansion.
No-Action Relief Sparks Market Confidence
In a landmark move, the SEC announced it will not pursue enforcement actions against advisers leveraging state-chartered trust companies for crypto custody. This decision followed a request from law firm Simpson Thacher & Bartlett, aiming to shield venture capital firms from penalties in this evolving space.
While non-binding, the guidance carries substantial influence. SEC Commissioner Hester Pierce emphasized its importance, noting that regulatory gray areas could harm investors. Importantly, the guidance extends to tokenized securities, not just crypto holdings, providing a broader framework for institutional players.
Custody Market Set for Rapid Growth
The SEC’s decision is expected to accelerate growth in the crypto custody sector. Currently, ten major firms—including Coinbase, Anchorage, BitGo, Fireblocks, and Fidelity—dominate the market, a concentration that ensures compliance but raises systemic risk concerns.
Research from 360iResearch projects the custody market will surge from $2.9 billion in 2024 to $7.7 billion by 2032. With the SEC providing legal clarity, this growth may arrive faster than anticipated. Providers are also expanding services beyond safekeeping, developing innovative financial products based on client assets.
Also Read: Polkadot and Sui ETFs Listed on DTCC—Could SEC Approval Come Any Day?
Coinbase Leads the Way in Custody Innovation
Coinbase’s Bitcoin-backed loans exemplify this evolution. The company recently reported surpassing $1 billion in loans within just eight months, reflecting growing market demand. Such developments indicate that custody is no longer a passive service but a foundation for next-generation crypto financial offerings.
The SEC’s pro-crypto stance marks a turning point for digital asset adoption, providing regulatory clarity and unlocking growth opportunities for custody providers. With major players innovating and the market set to expand rapidly, institutional involvement in crypto is poised to reach unprecedented levels.
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Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
