North Capital Investment Technology, Inc. announced that its subsidiary, North Capital Trust Company, has received a Charter and Certificate of Authority from the South Dakota Division of Banking to operate as a Public Trust Company. This development positions the firm to enhance its custody services and expand beyond private securities into broader digital asset custody solutions.
Grant Nelson, Managing Director and Head of Custody and Brokerage at North Capital, stated that the charter enables the company to better serve custody clients and expand its service scope. The company plans to commence trust company operations in the coming months. Trust companies have become increasingly important for custody of both tangible and digital assets, including tokenized securities, which aligns with North Capital's expansion into digital asset securities through its recently launched North Capital Token Services, LLC.
The move toward establishing a trust company began approximately six years ago when the Securities and Exchange Commission and FINRA issued their Joint Staff Statement on Broker-Dealer Custody of Digital Asset Securities. According to James P. Dowd, CEO of North Capital, this statement effectively prohibited clearing and carrying broker-dealers from serving as custodians for digital asset securities. This presented a significant challenge for North Capital's digital strategy, as its custodial broker-dealer, North Capital Private Securities Corporation, had received approval as a clearing and carrying firm in 2016. More information about North Capital is available at https://www.northcapital.com.
Although regulatory restrictions on broker-dealers holding digital asset securities have since been lifted, Dowd believes the trust company structure offers greater flexibility to meet evolving customer needs in a dynamic market environment. Institutional investors and registered intermediaries depend on qualified custodians to satisfy statutory requirements for registered investment advisors, registered funds, and qualified accounts including IRAs, ROTH IRAs, HSAs, and 401k plans.
The establishment of North Capital Trust Company as a South Dakota public non-depository trust company represents a strategic response to regulatory developments and market demands. The company emphasizes that this charter does not constitute regulatory endorsement from any agency, including the U.S. Securities and Exchange Commission, FINRA, or the South Dakota Division of Banking. Services will be offered subject to applicable laws, approvals, and documentation, and the trust company is not an FDIC-insured bank.
This development reflects broader industry trends where traditional financial institutions are adapting structures to accommodate digital assets. The trust company model provides North Capital with operational flexibility while maintaining regulatory compliance, potentially setting a precedent for other firms navigating the intersection of traditional finance and digital asset markets. As digital securities continue to gain traction, institutional-grade custody solutions like those offered through trust companies will likely become increasingly critical infrastructure for market participants.
