“Any non-fiduciary firm seeking the benefits of a federal bank charter should meet the same standards as community banks.”
Hey, it's Marc.
Welcome to the Monday edition of the 51 Insights digital asset newsletter.
On Thursday the SEC proposed an easier way for advisers to hold real crypto. On Friday the community banks sued to close a different door.
Here's what matters this week:
Let’s unpack. 👇
THE BIG STORY / CUSTODY
The SEC proposes. The banks sue.
What's going on here?
The SEC proposed rules on Thursday for how advisers and funds can hold crypto for clients. There are two new routes. State trust companies could act as custodians if their state lets them hold crypto. And if no custodian will take a token, the adviser can hold it itself, under strict rules. The vote was 3-0, one of Hester Peirce's last before she left on Friday.
On Friday, the Independent Community Bankers of America sued the OCC. It wants a judge to strike down the rule behind crypto trust charters, and to cancel Protego's conditional approval.
What does this mean?
The headlines say self-custody. The bigger route is the trust company. In its cost estimates, the SEC assumes about 1,645 advisers would use a state trust company. That's twice the 823 it assumes would hold coins themselves.
Until now, the easy way for an adviser to own crypto was an ETF. You get the price, not the coin. A staff letter last year gave the trust company route some cover. But the SEC says letters like that have “no legal force or effect.” A final rule would carry far more weight. VanEck's Matthew Sigel put it simply: guidance to rulemaking.
Now add the lawsuit. National trust banks already count as custodians. The OCC has issued 16 trust approvals to crypto-focused firms since December, by our count, many of them conditional. The banks are attacking the rule those approvals lean on.
The OCC keeps approving crypto trust banks. 16 OCC national trust bank approvals, conditional or final, for crypto-focused firms since December 2025. Includes bank-owned crypto units of Morgan Stanley, Nomura and Sony. 21 trust bank approvals in all since September 2025.
Why should I care?
My read: if this becomes final, the SEC will have built a second road to custody that doesn't run through the OCC. That road matters more if the banks win in court. If you run a custodian, know your fallback.
What I'm watching: which bank groups file comments, and the OCC's first answer in court.
Related Pro story: Wall Street's trust bank sprint
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Since Friday
Monday · The CFTC starts its rulebook. The CFTC asked for early comments on rules for retail crypto trading and a new “crypto asset market” exchange. With the Clarity Act stalled, both market regulators now write their own rules.
Monday · FinCEN drops two proposals. FinCEN withdrew its 2020 self-hosted wallet proposal and its 2023 crypto mixer proposal. Neither took effect.
Sunday · Tokenized stocks, around the clock. OKXICE, a venture of OKX and NYSE owner ICE, filed a notice to trade tokenized US stocks 24/7 against stablecoins, under the SEC's new exemption.
On the podcast
Nadine Chakar, DTCC: Tokenizing $100T without breaking the market · 36 min. Nadine runs DTCC's digital assets business. DTCC holds more than $114 trillion in securities, and its tokenized Treasuries and equities are due to fully launch this month. Her line fits this week's fight: when a client tokenizes a Treasury, “that underlying custody never leaves DTCC.”
The week ahead
Tuesday, October 6 · The comment clock starts. The custody proposal is due in the Federal Register, with 60 days for comments. Watch the bank groups' letters.
Tuesday, October 13 · Bank earnings. JPMorgan and Citi report. Custody bank BNY follows on Thursday. I'll listen for crypto custody and charters.
Tuesday, October 20 · Regulation Crypto Assets. Comments close on the SEC's broader crypto rulebook. Only two commissioners are left to finish it.
👉Follow all the stories on 51insights.xyz
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One useful read
Hester Peirce: Roller Coaster Ride · October 1. Her statement on the custody proposal, the day before she left. She'd have preferred the term “shelf-custody.” Free.
My question for the week: if your custodian lost its federal charter tomorrow, where would your clients' coins go?
That’s all for now, folks.
Take care
– Marc & Team
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