US Banks Rally For Updated Crypto Guidelines As Digital Asset Prices Surge
15 Fevereiro 2024 - 5:04PM
NEWSBTC
Amidst a significant surge in cryptocurrency prices, which
propelled the total crypto market capitalization to a high of $1.93
trillion on Thursday, influential interest groups are urging the US
Securities and Exchange Commission (SEC) to revise accounting
guidance that imposes higher costs on US banks for holding digital
assets on behalf of their customers. Banking Trade Groups Urge SEC
To Revise Crypto Accounting Rules According to a Bloomberg report,
a coalition of trade groups, including the Bank Policy Institute,
the American Bankers Association, the Securities Industry and
Financial Markets Association, and the Financial Services Forum,
sent a letter to the SEC on Wednesday outlining their desired
changes. The existing guidance requires public companies,
including banks, to treat cryptocurrencies they hold in custody as
liabilities on their corporate balance sheets. Consequently, banks
must allocate assets of a similar value to comply with capital
requirements and protect against potential losses. According to
Bloomberg, the trade groups have requested the SEC to consider the
following key changes: Exclude certain assets from being classified
under the broad crypto umbrella. This includes traditional assets
recorded or transferred using blockchain networks, such as
tokenized deposits, as well as tokens underlying SEC-approved
products like spot Bitcoin exchange-traded funds (ETFs). Grant
regulated lenders an exemption from the current balance sheet
requirement while maintaining the disclosure of crypto activities
in financial statements. The trade groups argued that if regulated
banking organizations are unable to provide digital
asset-safeguarding services at scale, it would negatively impact
investors, customers, and the broader financial system.
However, the SEC has defended its accounting guidance, citing the
“unique risks” and uncertainties posed by cryptocurrencies compared
to other assets held by banks. Limiting Custody Expansion?
The specific guidance in question, known as Staff Accounting
Bulletin No. 121, has faced criticism from banks since its
publication in 2022. Lenders argue that the bulletin limits
their ability to expand digital asset services for customers due to
the associated high costs. Consequently, banks missed out on
providing custody services for recently approved Bitcoin
exchange-traded funds, with Coinbase emerging as the preferred
custodian for the majority of ETF issuers. The trade groups also
highlighted additional challenges resulting from the guidance,
including a “chilling effect” on plans to utilize blockchain
technology for traditional assets. While the SEC described SAB 121
as non-binding staff guidance, it acknowledged that following it
enhances disclosure to investors regarding firms safeguarding
crypto assets for others. Related Reading: These Are The Altcoins
Drawing Whale Interest, Santiment Reveals As the SEC faces mounting
pressure, there have been efforts by lawmakers to repeal the
guidance. A resolution was introduced in the House Financial
Services Committee, spearheaded by Representatives Mike Flood and
Wiley Nickel, while Senator Cynthia Lummis sponsored identical
legislation in the Senate. These measures aim to remove the SEC’s
authority in making rules that impact bank custody. The outcome
remains uncertain, as the legislation’s success depends on
garnering sufficient support, particularly among Democrats and
within the White House. However, the collective efforts of
trade groups, lawmakers, and industry stakeholders could
potentially lead to regulatory changes that alleviate the burden on
banks holding digital assets, facilitating their participation in
the evolving cryptocurrency landscape. Furthermore, the recent
endeavors undertaken by US institutions exemplify a growing
interest and eagerness to adopt and invest in cryptocurrencies,
particularly Bitcoin. This heightened institutional
involvement has significantly contributed to the swift success of
Bitcoin spot ETFs, which gained regulatory approval merely a month
ago. Featured image from Shutterstock, chart from TradingView.com
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