U.S. institutions desire that the SEC modify its regulations regarding cryptocurrencies so that they may manage Bitcoin ETFs.
Prominent American banking institutions are actively engaging in lobbying efforts with the Securities and Exchange Commission (SEC) to reassess the definition of crypto assets. Their objective is to solidify their position of authority in the rapidly expanding cryptocurrency industry. This effort follows the recent authorization of exchange-traded funds (ETFs) for spot Bitcoin, which specifically disallowed American institutions from serving as asset custodians.
In a letter to SEC Chair Gary Gensler, a coalition consisting of the Securities Industry and Financial Markets Association, Bank Policy Institute, American Bankers Association, and Financial Services Forum emphasizes the absence of U.S. banks as custodians for the approved Bitcoin ETFs. Staff Accounting Bulletin 121 (SAB 121), which was published in March 2022 and regulates the accounting treatment of crypto asset custody obligations, should be revised, the organization urges the SEC.
SAB 121 defines crypto assets too broadly to exclude traditional assets recorded on blockchain technology, according to the coalition. The primary objective of this suggested modification is to shield assets, such as tokenized deposits, from the restrictive crypto guidelines.
Furthermore, the organization supports the notion of relieving banks of the obligation to record cryptocurrency assets on their balance accounts. They contend that this requirement is excessively expensive and hinders banks’ capacity to provide cryptocurrency custody services on a large scale. Nevertheless, they emphasize the significance of upholding disclosure obligations in order to guarantee openness for investors.
As a result of the approval of Bitcoin ETFs, Matt Hougan, chief investment officer at Bitwise, interprets the coalition’s letter as evidence of a shift in Washington’s regulatory position regarding crypto assets.
In the interim, Bloomberg ETF analyst Eric Balchunas observes that U.S. institutions are vying for roles in the crypto custodianship domain as an indication of their desire to participate in the digital finance wave. Further insights from industry insiders indicate that bankers are becoming more frustrated regarding their inability to facilitate spot Bitcoin ETFs for clients.
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