Global Trustee and Fiduciary Services Bite Sized Issue 10 2025

15 QUICK LINKS FINTECH MIFID II/MIFIR OPEN FINANCE SUSTAINABLE FINANCE/ESG T+1 ASIA AUSTRALIA EUROPE NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 10 | 2025 NORTH AMERICA SEC Staff Issues No-Action Relief Concerning the Use of State-Chartered Trust Companies as Custodians of Crypto Assets Under the Advisers Act and 1940 Act On 30 September 2025, the Staff of the Securities and Exchange Commission (SEC) Division of Investment Management issued a no-action letter in response to a request from a law firm for confirmation that state-chartered trust companies can serve as “qualified custodians” for purposes of Rule 206(4)-2 under the Investment Advisers Act of 1940 and permissible custodians for purposes of Sections 17(f) and 26(a) of the Investment Company Act of 1940, with respect to the placement and maintenance of crypto assets and cash and/or cash equivalents reasonably necessary to effect transactions in crypto assets. The no-action relief is conditioned on compliance with a series of conditions. Link to No-action Letter here Link to Statement by Commissioner Caroline A. Crenshaw here Link to Statement by Commissioner Hester M. Peirce here ETF Share Class Relief On 29 September 2025, the SEC issued a notice indicating its intent to grant an asset manager exemptive relief to permit registered open-ended funds to offer an ETF share class alongside one or more mutual fund share classes. Following on from prior submissions, the asset manager’s amended application is substantially similar, with a key change being the addition of a specific methodology for allocating income and expenses among classes that declare dividends more frequently for mutual fund classes than for the ETF class. The relief is expected to be available for both actively managed and index-tracking funds. The earliest date on which the SEC may grant the order is 16 October 2025, provided no hearing is ordered. The anticipated ETF share class relief for the asset manager, and potentially for other applicants who file substantially similar applications, is expected to allowmutual funds to offer an ETF class, and potentially ETFs could offer multiple mutual fund classes. Funds will be able to permit shareholders in a mutual fund class to exchange their mutual fund shares for ETF shares of the same fund, typically at their relative Net Asset Value (NAV). This tax-free exchange privilege is a significant benefit for investors. The SEC’s initial hesitation and continued emphasis on exemptive relief through individual applications stemmed from, among other things, concerns that differing transaction costs and tax benefits between cash-based mutual fund transactions and in-kind ETF transactions might not be fairly allocated across all share classes. The ongoing discussions and the amendments this current application aim to address these concerns. The SEC says that more than eighty other asset managers and fund complexes have filed applications for similar relief, many of whom have been encouraged by SEC staff to file amended applications substantially identical to the current application. This could lead to a significant shift in the fund landscape, allowing millions of investors to access ETF versions of mutual fund strategies, potentially driving substantial flows into ETFs. Fund boards will have heightened oversight responsibilities in deciding whether to add ETF or mutual fund share classes to products, and more disclosure for fund investors will be required. Link to the Notice here Link to Statement by Commissioner Mark T. Uyeda here For further information on dual share class ETF developments in the US and globally, and other ETF matters, please see our publication ETFs: Passive or Active – The World is Your Oyster! here