During a speech yesterday, SEC Commissioner Hester Peirce criticized the SEC staff accounting bulletin SAB 121, which significantly restricts banks from offering digital asset custody services. She argued that the SEC should adopt a more open approach to engagement.
SAB 121 mandates that any listed firm must record crypto-assets held in custody as both an asset and liability on its balance sheet. This requirement complicates banks’ compliance with Basel rules by necessitating a dollar of capital set aside for every dollar held in custody, rendering crypto custody economically unfeasible.
Recent statistics indicate that U.S. banks lag behind their international counterparts in providing digital asset custody services. Notably, when the 11 spot Bitcoin ETFs were issued in January, no banks offered custody for the underlying cryptocurrency.
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