Banks Have Green Light to Hold Crypto After SEC Axes Rule

Key Points

  • The SEC has eliminated a rule requiring firms to record crypto assets held for customers as liabilities, potentially allowing more banks to enter the crypto custody business.
  • The removal of SAB 121 could lead to industry consolidation and expand institutional crypto services beyond Bitcoin and Ethereum.

Summary

The Securities and Exchange Commission (SEC) has made a significant change by eliminating Staff Accounting Bulletin 121 (SAB 121), which previously required firms to list crypto assets held for customers as liabilities on their balance sheets. This decision could pave the way for traditional banks to delve into the crypto custody market, potentially reshaping the financial landscape. Industry experts suggest this could lead to consolidation within the crypto custody sector, with traditional banks possibly acquiring crypto-native firms like Gemini or Anchorage. However, the transition is expected to be gradual, with banks initially focusing on custody services for Bitcoin and Ethereum. The new regulatory framework, outlined in Staff Accounting Bulletin 122, requires companies to assess their crypto-safeguarding obligations under broader accounting standards, effective for fiscal years starting after December 15, 2024. This change follows previous legislative efforts to repeal SAB 121, which were vetoed by former President Joe Biden.

yahoo
January 26, 2025
Crypto
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