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U.S. banking industry leaders vie for custody rights of spot Bitcoin ETF in a letter to the U.S. Securities and Exchange Commission.
U.S. banking industry giants are drafting a joint letter to the U.S. Securities and Exchange Commission (SEC), advocating for the regulation of Bitcoin (BTC) exchange-traded funds (ETFs). This letter, sent by four industry leaders to SEC Chairman Gary Gensler, requests a modification to a law passed in 2022 (SAB No. 121), which regulates cryptocurrency custody based on several key developments, such as approving BTC ETFs in the spot market.
According to Thomson Reuters, the South African Bureau of Standards No. 121 law mandates protecting entities holding digital assets, requiring them to report fair values on their balance sheets. However, the U.S. Bank Policy Institute, the Bankers Association, the Financial Services Forum, and the Securities Industry and Financial Markets Association argue that SAB No. 121 impedes their ability to participate.
"Since the release of SAB 121 in 2022, the associations have expressed their concerns about the announcement in writing and in meetings with the committee staff," they stated.
The primary concern identified and discussed is how the on-balance-sheet requirements of SAB 121 negatively impact U.S. banking organizations and investors due to associated prudential impacts.
The associations emphasize that the treatment on the balance sheet would prevent highly regulated banking organizations from providing large-scale custody solutions for digital assets.
Additionally, the associations highlight that the broad definition of 'cryptographic assets' in SAB 121, along with on-balance-sheet requirements, would have a chilling effect on the ability of banking organizations to responsibly develop use cases for distributed ledger technology (DLT) more broadly.
As a solution, these organizations propose narrowing the definition of "cryptographic assets" and exempting banking organizations from having to list assets on the balance sheet while maintaining disclosure requirements. Exempting banking organizations from on-balance-sheet treatment but requiring disclosures about their digital activities would address the concerns raised by banking organizations without undermining SAB 121's goal of promoting disclosure to investors. |
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