Financial banks in the United States have written a formal request to the U.S. Securities and Exchange Commission (SEC) asking for a revision of the existing guidelines on cryptocurrencies. If the request is approved, these banks will be able to benefit from the thriving business of spot Bitcoin exchange-traded funds (ETFs).
Why are U.S. Banks Unable to Invest in Crypto Products?
In April 2022, the SEC implemented the Staff Accounting Bulletin 121 (SAB 121), which provides regulatory guidance on how companies should handle crypto assets for their customers. According to the agency, financial institutions must record any crypto investment as a liability on their balance sheets. This means that banks need to allocate additional assets of equivalent value to protect customers from potential losses.
Due to the ongoing implementation of SAB 121, many financial institutions are facing challenges in offering crypto products to their users. The requirement for additional capital makes these services expensive for companies to manage.
A Push for Crypto Adoption
On February 14th, a coalition of trade groups, including the American Bankers Association, the Bank Policy Institute, the Financial Services Forum, and the Securities Industry and Financial Markets Association, collectively submitted a letter to the SEC expressing their concerns and requesting modifications to SAB 121.
The trade group’s letter highlights that financial companies offering spot Bitcoin ETFs have partnered with crypto custodians such as Coinbase, BitGo, and Gemini.
The letter specifically requests the exclusion of certain assets from the SEC’s stringent regulatory guidelines. This would allow U.S. banks and other financial organizations to easily access traditional assets stored on the blockchain, such as tokenized assets. Additionally, they should be able to engage with SEC-approved financial products like spot Bitcoin ETFs.
Public data reveals that financial companies offering spot Bitcoin ETFs have attracted as much as $12.8 billion from U.S. investors.
Tags:
Bitcoin (BTC)
Regulation
United States
