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The world of digital assets continues to evolve rapidly. What was once a niche corner of finance is now entering the mainstream debate—especially as regulators step in, laws change, and institutional interest grows. For investors today, understanding how regulation, custody, and risk interplay is no longer optional—it’s essential.
In this article, we’ll walk through what’s recently changed, what those changes mean (and don’t mean), how to think about integrating crypto into a diversified portfolio, and key questions to ask if you pursue digital assets.
Why 2025 Is a Turning Point for Crypto Regulation
SEC No-Action Letter for State Trust Companies
In a major development on September 30, 2025, the SEC’s Division of Investment Management issued a no-action letter stating it would not recommend enforcement action if Registered Investment Advisers (RIAs) or regulated funds custody crypto assets and related cash with qualified state-chartered trust companies under certain conditions. SEC+2Akin - Akin, an Elite Global Law Firm+2
Previously, ambiguity surrounded whether such trust companies met the definition of a “bank” under the Custody Rules in the Investment Advisers Act and Investment Company Act. The new guidance offers more clarity, provided due diligence, strong controls, and proper disclosures are in place. Sidley Austin+2Alston & Bird+2
However, the letter is not a blanket change in law—it applies only to the specific factual scenarios described and does not change existing statutes. Alston & Bird+2Morrison Foerster+2
Broader Regulatory Shifts: Stablecoins & Federal Oversight
Another landmark development is the passage of the GENIUS Act in mid-2025, which establishes a clearer federal framework for stablecoin issuance, reserve backing, audits, and supervision. Wikipedia Stablecoins are central to the digital asset infrastructure because they bridge fiat currency and crypto, flexibility, trading, and payments.
At the same time, debates continue in Congress and regulatory bodies about how to classify various tokens (as securities, commodities, or other categories), how to enforce anti-fraud protections, and how to harmonize oversight across agencies.
These developments together mean we are in what many are calling a “crypto regulation inflection point” — the rules are being written now, and those rules will influence how accessible and suitable digital assets can be for investors.
What the New Guidance Means (—and Doesn’t Mean) for Investors
What It Helps Enable
• Expanded custodial options: RIAs and funds may have a broader set of qualified custodians to work with, if those custodians meet strict standards. Morrison Foerster+2Akin - Akin, an Elite Global Law Firm+2
• Better clarity on enforcement: The SEC’s willingness to specify safe harbors signals a shift from aggressive enforcement to more predictable guidance. Alston & Bird+2SEC+2
• More institutional support: As regulatory risk is reduced, institutional capital may flow more freely into digital assets, potentially improving flexibility and infrastructure.
What It Does Not Guarantee
• No immunity from risk: Even with the no-action relief, custodial, cybersecurity, and operational risks remain. Any deviation from represented facts or control failures could void the relief. SEC+2Morrison Foerster+2
• Not a change in the legal definition: The letter does not change what counts as a “qualified custodian” under law; it only expresses a staff enforcement perspective under narrowly tailored conditions. Alston & Bird+1
• Not a guarantee of future relief: Future SEC or legislative actions could alter or reverse the framework. Investors should remain adaptable.
Pros & Cons of Including Crypto in a Diversified Portfolio
Thinking of dipping your toes into digital assets? Consider these pros and cons first.
Advantages
• Potential growth opportunities: Cryptocurrencies and blockchain-based projects offer exposure to a frontier innovation space.
• Diversification potential: Some digital assets may have low correlation to stocks or bonds (though correlation varies).
• Flexibility and accessibility: Markets operate 24/7, and many digital assets are fractional and globally tradable.
Challenges & Risks
• Volatility: Price swings in crypto are extreme compared to traditional assets.
• Regulatory uncertainty: Classifications, tax rules, and rules around custody or trading may change.
• Custody and security risk: Loss of private keys, hacks, or mismanagement by custodians remain real threats.
• Counterparty risk: In tokenized or synthetic assets, underlying assets may be subject to derivatives or issuer risk.
• Lack of fundamental metrics: Many crypto projects cannot be evaluated using traditional metrics like earnings, making valuation more speculative.
How to Evaluate Custody, Security & Counterparty Risk
When working with crypto investments, custody and counterparty risk are paramount. Here’s a checklist to guide your evaluation:
Custody & Security Vetting (for Custodians or Trust Companies)
• Confirm audited financial statements under GAAP and internal control reports (e.g. SOC-1, SOC-2) Sidley Austin+2Akin - Akin, an Elite Global Law Firm+2
• Review policies on private key management, encryption, and business continuity planning SEC+2Akin - Akin, an Elite Global Law Firm+2
• Ensure agreement prohibits rehypothecation or lending without client consent Sidley Austin+2SEC+2
• Verify segregation of client assets from custodian assets SEC+2Alston & Bird+2
• Assess that the trust company is licensed by state banking authorities and authorized to provide crypto custody SEC+2Akin - Akin, an Elite Global Law Firm+2
Counterparty / Token Risk Evaluation
• Examine the underlying protocol or issuer: Is the token backed by assets, algorithmic, or synthetic?
• Review how tokens are created, burned, or governed
• Assess the transparency of reserves (for stablecoins) — they should be audited and verifiable
• Understand governance, voting rights, or control mechanisms
• Investigate dependencies (e.g. oracle systems, smart contract vulnerabilities)
Use Cases Beyond Speculation
Digital assets are more than speculative bets. Several real-world applications are gaining traction:
Tokenization of Real Assets
Properties, art, or commodities can be tokenized—turning real-world assets into blockchain-based digital tokens. This could improve flexibility, fractional ownership, and transparency.
Decentralized Finance (DeFi) Protocols
DeFi platforms allow lending, borrowing, yield farming, and automated market making without traditional intermediaries. While promising, they are also some of the riskiest exposures due to smart contract bugs or complex architecture.
Digital Payments, Remittances & Cross-Border Transfers
Cryptos and stablecoins may reduce friction, costs, and delays in payment systems, especially across borders or in underbanked markets.
Infrastructure & Network Layer Projects
Investors may target blockchain networks, oracle services, or infrastructure providers—assets that support the digital economy rather than individual token speculation.
What Investors Should Consider (with Prudence)
To responsibly consider crypto and digital assets in 2025, here’s an approach to consider:
1. Start small and experiment
Use a modest allocation—only an amount you can tolerate losing—to test how volatility feels.
2. Focus on quality, not hype
Prioritize projects with strong teams, transparent tokenomics, and audited backing or reserves.
3. Ask tough custodial questions
Don’t accept vague promises. Insist on audited controls, clear segregation, and robust due diligence.
4. Stay tax-aware
Crypto gains, losses, staking rewards, and airdrops may have distinct tax treatment. Consult a tax professional.
5. Reassess regularly
As regulation evolves, some projects may become non-compliant or less viable. Be ready to exit or reallocate.
6. Seek professional guidance
Work with advisors experienced in both traditional and digital assets to build a well-rounded strategy.
Conclusion
2025 is shaping up to be a pivotal year for digital assets. The SEC’s no-action letter concerning state-chartered trust companies marks a more defined stance on custody, but it is not a regulation rewrite—investors must still proceed cautiously and do robust due diligence. Emerging regulation like the GENIUS Act introduces clarity for stablecoins, but the overall regulatory landscape remains fluid.
For investors considering digital assets, the key is balance: limit exposure, seek high-quality projects, assess custodian strength, and stay flexible. With volatility, innovation, and regulation intersecting, a disciplined, informed approach offers a reasonable chance for participation without undue risk.
If you have questions, feel free to reach out. We can review your goals, risk tolerance, and emerging opportunities together.
Sources
1. SEC Division of Investment Management – No-Action Letter on State Trust Companies (Simpson Thacher) (Sep 30, 2025) SEC
2. Akin Gump – “SEC Allows State-Chartered Trust Companies to Serve as Crypto Custodians” (Oct 7, 2025) Akin - Akin, an Elite Global Law Firm
3. Sidley – “SEC Staff Issues No-Action Relief Permitting Use of State-Chartered Trust Companies” (2025) Sidley Austin
4. Alston & Bird – Commentary on the no-action letter and SEC treatment of crypto Alston & Bird
5. MoFo – Overview of custody-related regulatory developments (2025) Morrison Foerster
6. Congress.gov / GENIUS Act legislative text (2025)
Disclosures:
Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. Investing involves risk which includes potential loss of principal. Past performance is not a guarantee of future results. The use of asset allocation or diversification does not assure a profit or guarantee against a loss.
These concepts were derived under current laws and regulations. Changes in the law or regulations may affect the information provided.
Neither OneAmerica Securities, the companies of OneAmerica Financial, Fuller Financial, nor their representatives provide tax or legal advice. For answers to specific questions and before making any decisions, please consult a qualified attorney or tax advisor.
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