North Capital Investment Technology, Inc., a financial technology company specializing in private securities, announced that its wholly owned subsidiary, North Capital Trust Company, has received a Public Trust Company charter from the South Dakota Division of Banking. The charter authorizes the trust company to transact business as a public trust company, positioning it to offer enhanced custody services for both tangible and digital assets, including tokenized securities.
The move comes after years of regulatory uncertainty for broker-dealers handling digital asset securities. In 2019, the Securities and Exchange Commission and FINRA issued the Joint Staff Statement on Broker-Dealer Custody of Digital Asset Securities, which effectively barred clearing and carrying broker-dealers from acting as custodians for such assets. Although the statement was withdrawn last year, North Capital CEO James P. Dowd noted that it was a setback for the firm’s digital strategy. The company’s custodial broker-dealer, North Capital Private Securities Corporation, had received approval as a clearing and carrying firm in 2016.
Trust companies have become a preferred vehicle for custody of digital assets, offering flexibility that broker-dealers may lack. North Capital has been expanding its digital asset activities, having launched North Capital Token Services, LLC earlier this year. Grant Nelson, Managing Director and Head of Custody and Brokerage, expressed enthusiasm: “We are excited to receive our Public Trust Company charter, which positions us to better serve our custody clients and expand our scope of services beyond private securities.”
The charter allows North Capital Trust Company to serve as a qualified custodian for registered investment advisors, registered funds, and qualified accounts such as IRAs, Roth IRAs, HSAs, and 401(k) plans. Investors and intermediaries rely on qualified custodians to meet statutory requirements, and the trust company structure provides a robust framework for safeguarding assets. Dowd added, “Although broker-dealers are no longer precluded from holding digital asset securities on behalf of their customers, we believe that North Capital Trust Company will provide flexibility to more fully meet the evolving needs of our customers in a rapidly changing market environment.”
North Capital Trust Company is a South Dakota public non-depository trust company and is not an FDIC-insured bank. Its charter does not guarantee availability of services in all jurisdictions. The parent company, North Capital Investment Technology, offers technology solutions for issuers, intermediaries, and investors in the exempt securities market through separate affiliated entities, including brokerage, trust, and custody services, all subject to applicable regulatory approvals.
This development highlights the growing importance of trust companies in the digital asset ecosystem, as regulatory frameworks evolve. By obtaining a trust charter, North Capital positions itself to navigate the complex landscape and meet client demands for secure custody of a wider range of assets.
