Under specific circumstances, the US Securities and Exchange Commission (SEC) is permitting certain banks and brokerages to avoid reporting customer cryptocurrency holdings on their balance sheets.
Companies that possess cryptocurrency must put measures in place to mitigate the risks involved in order to avoid the reporting requirement. Strong internal controls and asset protection in case of bankruptcy are two examples of these measures.
According to a source, “closed-door” talks between financial institutions and the SEC led to the change. The regulator thinks that businesses have strengthened their security protocols in response to hacking and other business failures that can jeopardize investors’ cryptocurrency holdings.
The accounting method used to deter banks from providing cryptocurrency services. US cryptocurrency holders would have more alternatives with the new strategy for where to keep their holdings.
Shortly after a recent attempt in Congress to veto the SEC’s Staff Accounting Bulletin No. 121 (SAB 121) was unsuccessful, the modification was made public.
On Thursday, the US House of Representatives voted to overturn President Biden’s veto of the anti-SAB 21 measure. Though a majority voted to reverse the veto, it was unable to achieve the two-thirds majority required.
As a consequence, SAB 121 and President Biden’s veto are still in effect. The SEC will persist in enforcing its accounting guidelines concerning the custody of cryptoassets.
Following the SEC’s approval of spot Bitcoin ETFs in January, financial institutions and banks are keen to become involved in the cryptocurrency space. The most recent modification may make that possible.
