Congress Calls on SEC to Allow Banks to Custody Crypto

In a recent letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler, 42 US Congressmen urged the SEC to allow banks to offer cryptocurrency custody services.

The letter comes in the wake of the SEC’s decision in July this year to allow public companies to exclude customers’ crypto holdings from their balance sheets, provided they manage the associated risks.

The letter, led by Representatives Patrick McHenry, Cynthia Loomis, French Hill and Tim Scott, criticizes SEC Accounting Bulletin No. 121 (SAB 121). The Congressmen claim that SAB 121 was issued without consultation with key regulators and does not accurately represent the legal and economic responsibilities of custodians. They warned that this misrepresentation could expose consumers to greater financial risk.

SAB 121 requires companies that hold cryptocurrencies for customers to list those assets as liabilities, making cryptocurrency custody less attractive to banks.

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The letter highlights concerns about the SEC’s guidance, stating that the use of official guidance to implement policy changes violates the Administrative Procedure Act. The Representatives urged the SEC to rescind SAB 121 and work with Congress to provide safe and secure custodial services for digital assets.

Alexander Stefanov