McDermott Obtains Landmark “No-Action” Relief for Two Ocean Trust Concerning Digital Asset Custody

Overview


International law firm McDermott Will & Emery assisted Two Ocean Trust in obtaining landmark “no-action” relief from the Wyoming Division of Banking, stating that Two Ocean Trust is permitted to custody digital assets.

Two Ocean Trust provides a novel method for high-net worth individuals, family offices and advisers to securely invest in digital assets, including through trust structures. “Cryptocurrency represents an opportunity to invest in an entirely new asset class,” said Joel Revill, CEO of Two Ocean Trust. “High net worth individuals and family offices want to be involved, but they want to do so with the same level of security, legal protection, regulatory oversight, and private client service that they get today with traditional financial assets. This is what Two Ocean Trust has built – a comprehensive, full-service wealth management platform for digital asset investors that has not previously existed.”

By guiding Two Ocean Trust through the regulatory requirements of trust, banking, investment and securities laws, McDermott obtained “no-action” relief from the Wyoming Division of Banking. This decision permits Two Ocean Trust to provide custody of digital assets, including virtual currencies and tokenized securities. In its response, the Wyoming Division of Banking also issued the first-ever regulatory opinion by a state or federal banking regulator that a trust company is permitted to act as a “qualified custodian” for digital assets under the Investment Advisers Act of 1940.

“Wyoming has developed the strongest regulatory framework for digital assets, and with today’s guidance, provides a detailed pathway to secure custody of digital assets. With this guidance paving the way for others to follow, regulated funds, family offices and high-net worth individuals can now safely invest in cryptocurrency and other digital assets,” said Elise McGee, Chicago-based partner in the Private Client practice.

Today’s no-action letter solidified Wyoming’s position as one of the country’s most FinTech-friendly economies and its ongoing commitment to provide legal certainty to digital asset markets. Over the last several years, the Wyoming Legislature has passed over 20 tax, trust, LLC and privacy laws that are favorable to high net worth investors, including those with digital assets. The Wyoming Division of Banking has developed the framework to promote responsible innovation, while also ensuring compliance with the expectations of sophisticated wealth managers.

Private Client and Chicago-based partner James Cundiff noted: “As millions of dollars of cryptocurrency can disappear without a trace – the need for security and qualified custody is clear. Two Ocean is uniquely positioned to facilitate secure wealth management and estate planning with cryptocurrency.”

New York-based McDermott lawyer Joseph B. Evans added: “Since the inception of the digital asset industry, federal and state regulators have demonstrated varying degrees of curiosity, fear, and willingness to accept digital assets. The Wyoming Division of Banking has taken a refreshingly forward-looking and collaborative approach. A key question facing various market participants is where to safely store digital assets. Two Ocean can solve that question. We appreciate the Wyoming Division of Banking’s openness to the digital asset industry, its careful consideration of Two Ocean’s submission, and its ultimate decision to grant Two Ocean’s request for “no-action” relief, which makes clear that Two Ocean is permitted to custody digital assets. This is a great result for Two Ocean and the larger digital asset industry.”

“We are delighted to have supported Two Ocean through this milestone decision,” said David Taub, New York-based partner and head of the Firm’s Financial Institutions Advisory Practice. “This is a significant result not only for our client, but is a significant achievement for our Firm. The seamless, cross-disciplinary work of our Private Client and FinTech and Blockchain practices has accomplished a result with potential implications for a large number of current and prospective clients.”

McDermott’s Private Client Practice represents high-net-worth individuals, families and closely held businesses with an extraordinary focus on the client’s specific, unique objectives. The team, more than 110 strong, is continually recognized as the top private client practice in the US and among the top practices worldwide. In 2020, McDermott’s Private Client practice was awarded the only national Band 1 ranking for Private Wealth Law in the US by Chambers High Net Worth, a guide dedicated to the global private wealth market.

McDermott’s cross-disciplinary FinTech and Blockchain team understands the complex legal and business challenges that face industry participants and includes lawyers from across the Firm’s major practice areas, including corporate, finance, global privacy and cybersecurity, government and lobbying, intellectual property, litigation, technology and commercial transactions, and white-collar and securities defense. The team advises a broad range of FinTech businesses, including robo-advisors, high-frequency trading firms, broker-dealers, banks, private fund sponsors, technology startups and established financial-services enterprises and offer end-to-end counsel on products and services.

About McDermott


McDermott Will & Emery partners with leaders around the world to fuel missions, knock down barriers and shape markets. Our team works seamlessly across practices, industries and more than 20 locations to deliver highly effective—and often unexpected—solutions that propel success. More than 1,200 lawyers strong, we bring our personal passion and legal prowess to bear in every matter for our clients and the people they serve.

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