Rally

Bank AI

Wednesday

Bitcoin

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 <a href="https://www.newsbtc.com/news/bitcoin/bitcoin-price-rally-75000-cup-handle-breakout/" target="_blank" rel="noopener ">higher costs</a> on US banks for holding digital assets on behalf of their customers. 
<h2 id="banking-trade-groups-urge-sec-to-revise-crypto-accounting-rules">Banking Trade Groups Urge SEC To Revise Crypto Accounting Rules</h2> 
According to a Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-02-15/as-bitcoin-rallies-banks-push-sec-to-change-an-accounting-guideline-sab-121" target="_blank" rel="noopener nofollow">report</a>, 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.&nbsp; 
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: 
<ol> 
 <li>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).</li> 
 <li>Grant regulated lenders an exemption from the current balance sheet requirement while maintaining the disclosure of crypto activities in financial statements.</li> 
</ol> 
The trade groups argued that if regulated <a href="https://www.newsbtc.com/bitcoin-news/52000-and-climbing-bitcoin-eyes-new-highs-this-march-predicts-top-firm/" target="_blank" rel="noopener ">banking organizations</a> are unable to provide digital asset-safeguarding services at scale, it would negatively impact investors, customers, and the broader financial system.&nbsp; 
However, the SEC has defended its accounting guidance, citing the “unique risks” and uncertainties posed by cryptocurrencies compared to other assets held by banks.&nbsp; 
<h2 id="limiting-custody-expansion">Limiting Custody Expansion?</h2> 
The specific guidance in question, known as Staff Accounting Bulletin No. 121, has faced criticism from banks since its publication in 2022.&nbsp; 
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 <a href="https://www.newsbtc.com/news/stacks-stx-stuns-price-soars-over-60-in-epic-recovery-as-tvl-explodes/" target="_blank" rel="noopener ">blockchain technology</a> 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. 
As the SEC faces mounting pressure, there have been efforts by lawmakers to repeal the guidance.&nbsp; 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.&nbsp; 
However, the collective efforts of trade groups, lawmakers, and industry stakeholders could potentially lead to <a href="https://www.newsbtc.com/news/bitcoin-breaches-52000-reclaiming-1-trillion-market-cap-as-btc-eyes-higher-ground/" target="_blank" rel="noopener ">regulatory changes</a> 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.&nbsp; 
This heightened institutional involvement has significantly contributed to the swift success of Bitcoin spot ETFs, which gained regulatory approval merely a month ago. 
<img loading="lazy" decoding="async" class="size-large" src="https://www.tradingview.com/x/YJqtIJYC/" alt="Crypto" width="1814" height="858"> 
Featured image from Shutterstock, chart from TradingView.com

US Banks Rally For Updated Crypto Guidelines As Digital Asset Prices Surge

Table of Contents

NewsBTC

Outros artigos publicados em 15 de fev. de 2024

U.S. Spot Bitcoin ETFs Inflows Top $4 Billion

Is the Bitcoin price soon going to reach an all-time high? Here’s the easiest way to buy Bitcoin!

Kraken Acknowledges Gratitude to Mt. Gox Creditors for Exchange Selection

MARKETS INSIGHT - VOLATILITY OVERVIEW VOL.9

Internet sensation KSI faces pump-and-dump allegations in crypto sphere

ARK Invest adjusts portfolio, sells Coinbase and Robinhood shares

Join our free newsletter for daily crypto updates!