Today Fireblocks Trust announced it has attracted several high profile names in the crypto sector as digital asset custody clients, including venture capital firm Castle Island, NYSE owned Bakkt, FalconX and Galaxy. This is particularly noteworthy because Fireblocks started out as a custody technology provider, with early backing from the world’s largest custodian BNY that put it on the map. Now, by operating a trust company it provides custody in addition to technology, which means Fireblocks competes with BNY.
When Fireblocks first applied for the New York state trust charter last year, arguably it was not competing head on with BNY. That’s because at the time, the SEC’s SAB 121 prevented banks from providing crypto custody. But there was a reasonable chance that might change. It did in January 2025, when the SEC rescinded SAB 121 following Trump’s inauguration as President.
From the perspective of banks, the SEC has both given and taken away. While it removed the SAB 121 blocker, the SEC also recently clarified via a no action letter that state trust companies can serve as custodians for crypto assets held by registered investment advisers and regulated funds. State trusts generally are not regarded as custodians for these clients for other asset classes. One of the SEC commissioners objected to the interpretation.
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