The U.S. SEC has reaffirmed its commitment to the Staff Accounting Bulletin No. 121 (SAB 121), restricting financial institutions from holding cryptocurrency. Recent statements by SEC representatives highlight their firm stance on this issue.
Nate Geraci's Comments
ETF Store President Nate Geraci stated in an X post on September 10, 2024, that the SEC 'appears to be firmly committed' to SAB 121. Geraci emphasized that the commission does not want to provide regulated financial institutions with the ability to custody crypto: 'They simply don’t want to provide regulated financial institutions with the ability to custody crypto.'
Paul Munter's Address
SEC Chief Accountant Paul Munter discussed the agency’s regulatory stance on accounting for crypto assets at a banking conference on September 9, 2024. He confirmed that the SEC staff’s views in SAB 121 remain unchanged. According to the rules created in March 2022, the SEC requires financial institutions to recognize a liability for crypto assets on their balance sheets.
Differences in Crypto Asset Accounting
Munter noted that not all crypto custody arrangements comply with the guidelines proposed in SAB 121. For example, companies holding crypto assets with bankruptcy protection may not be required to report a liability on their balance sheets. Additionally, 'broker-dealers' facilitating cryptocurrency transactions without controlling the cryptographic keys may also not be required to record liabilities.
In conclusion, despite criticism from some industry representatives and within the SEC itself, the agency remains committed to SAB 121 rules limiting financial institutions' ability to custody cryptocurrency.
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