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First comprehensive digital asset wealth management platform receives regulatory clearance

Tuesday, October 27, 2020
Opalesque Industry Update - Two Ocean Trust, a Wyoming-chartered trust company that provides wealth management services for high-net worth individuals, family offices, and advisers, announced the launch of a comprehensive suite of digital asset products and services.

Two Ocean's wealth management services now include crypto-optimized offerings for clients who have substantial digital assets or who wish to safely begin investing in digital assets. These services offer fully regulated trust and estate management, custody, and trade execution.

This announcement follows a letter by the Wyoming Division of Banking to Two Ocean Trust granting "no action" relief. The no-action letter permits Two Ocean Trust to custody digital assets in Wyoming and expresses the Division of Banking's opinion that Two Ocean Trust may act as a "qualified custodian" under the Investment Advisers Act of 1940. This landmark response is a first in the U.S. by a state or federal banking regulator and reinforces the rapid emergence of Wyoming as one of the country's most crypto-friendly economies and regulatory jurisdictions.

"Crypto-currency represents a truly rare opportunity to invest in an entirely new asset class," said Two Ocean Trust CEO Joel Revill. "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."

One service that has been absent for digital asset investors is estate management. Two Ocean's platform provides the ability for individuals with substantial crypto assets to transfer those assets to their heirs efficiently and securely.

"Until now, estate planning options for crypto investors have been greatly limited and almost completely unregulated," said Dustin Sventy, Two Ocean Trust's Chief Investment Officer. "Our platform provides the required regulatory and operational capabilities to make sure digital assets are properly held and managed for families and their beneficiaries."

In the last few years, Wyoming has emerged as one of the country's digital asset epicenters. Buoyed by the state's low tax burden and favorable trust, LLC, and privacy laws, the Wyoming Legislature has passed 20 separate laws that created a clear framework for the legal status of digital assets and provides a holistic framework to safely integrate this asset class into existing financial markets. The Wyoming Division of Banking spent the last two years honing this framework to promote responsible innovation and also ensure compliance with the expectations of sophisticated wealth managers.

The Division of Banking's no-action letter is the latest acknowledgment of the state's commitment to provide legal certainty to digital asset markets. While a range of custody providers exist in the digital asset space today, many legal questions surround whether those custody providers are legally permitted to custody digital assets and whether they are a "qualified custodian" under the Investment Advisers Act of 1940. The letter, made public on October 23, provides the Division of Banking's determination that Two Ocean Trust is permitted to custody digital assets in Wyoming and its opinion that Two Ocean may act as a "qualified custodian."

"It's no secret that the state of Wyoming is orchestrating a digital asset renaissance," said Albert L. Forkner, Commissioner of the Wyoming Division of Banking. "We were the first state to approve a banking charter for digital assets and, with this announcement, the first banking regulator in the U.S. to provide needed legal clarity relating to trust companies and the Custody Rule."

Two Ocean Trust engaged with law firm McDermott Will & Emery to request the Division's opinion. Partner Elise McGee noted: "Wyoming has developed the strongest regulatory framework for digital assets and, with today's guidance, provides a detailed pathway to secure and qualified digital asset custody. Trust companies, regulated funds, family offices and high-net worth individuals can now lead the mainstream expansion of cryptocurrency and other digital assets."

McDermott partner James Cundiff added, "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."

In building its wealth management platform for digital assets, Two Ocean Trust partnered with leading institutional service providers in the industry. Although these solutions are available to institutional investors only, Two Ocean was able to forge relationships with these providers to deliver the most secure and reliable platform available for high-net worth individuals and family offices. These partners include institutional digital asset platform Anchorage and institutional trading technology provider Talos.

"Institutions want their assets held securely and accessibly, and they want to be able to execute trades directly from custody," said Diogo Mónica, President and Co-Founder of Anchorage. "The Anchorage platform is a truly comprehensive solution, enabling Two Ocean Trust's clients to hold and trade digital assets easily and securely."

"It is important that our platform bring to bear the digital asset industry's latest innovative solutions with a robust regulatory overlay," said Revill. "We'll continue to work side-by-side with the Division of Banking to ensure compliance and continue to partner with leaders in the digital asset industry to deliver the most advanced and secure solutions for our clients."

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