Earlier this year, both the House and Senate voted to overturn the SEC’s SAB 121 accounting rule that prevented banks from providing crypto custody solutions. However, President Biden used his veto so the rule still stands. Mike Flood, the Congressman that led the bipartisan House vote, has vowed to work with a new SEC Chair to ditch SAB 121 for good.
However, Flood’s work wasn’t entirely wasted. The dual votes highlighted the issue that forcing banks to put assets under custody on their balance sheet is both unconventional and affects their compliance with bank balance sheet rules. As a result, it makes it prohibitively expensive for banks to provide crypto custody and inhibits innovation on the tokenization front.
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