Leading trade groups are urging the U.S. Securities and Exchange Commission (SEC) to modify accounting rules that currently increase the cost for U.S. banks to hold digital assets on behalf of their customers.
This plea comes amid bipartisan pressure from Congress for the SEC to reconsider these guidelines and comes from a coalition comprising organizations like the Bank Policy Institute, the American Bankers Association, the Securities Industry and Financial Markets Association, and the Financial Services Forum, which requested the changes in a letter to the SEC.
The coalition argues that the current rules, which mandate that public companies including banks classify cryptocurrencies they hold in custody as liabilities, force these institutions to earmark equivalent assets to meet capital requirements, thereby making it prohibitively expensive to offer digital asset custody services.
The adjustments the banks are calling for include excluding certain assets from the broad definition of cryptocurrency, especially traditional assets managed or transferred via blockchain technology, and an exemption for regulated lenders from having to record these assets as liabilities, while necessitating the disclosure of their crypto activities in financial reports.
The SEC justifies the current guidance by highlighting the risks and uncertainties crypto assets present compared to traditional assets. However, banks argue that this stance effectively hampers their ability to expand digital asset services for customers due to the associated high costs.
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- Source: https://www.cryptocompare.com/email-updates/daily/2024/feb/16/
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