Coinspeaker
SEC Eases Crypto Reporting Requirements for Banks and Brokerages
The US Securities and Exchange Commission (SEC) has decided that banks and brokerage firms no longer have to include their customers’ cryptocurrency holdings on their financial reports. However, to take advantage of the bypass, financial institutions must ensure they manage the risks associated with the crypto asset.
It was revealed in a report by Bloomberg that regulatory officials have started providing guidance that certain arrangements might not need to report cryptocurrency-related liabilities on their financial statements.
It was further stated that large banks that have consulted with the security commission since 2023 received approval to avoid this reporting requirement provided they can ensure that customers’ assets will be protected should any form of bankruptcy occur. The financial watchdog has also demanded that banks take additional safety measures to protect these holdings.
Potential Expansion of Crypto Services
The initial rule set by the SEC requires companies to record their cryptocurrencies as long-term intangible assets on their financial reports, which makes it difficult for banks and financial companies to offer cryptocurrency services as their balance sheet could trigger capital requirement rules set by banking regulators.
The SEC’s new approach could widen the number of companies in the U.S. offering crypto services, giving Americans enough options to select which companies they would prefer to manage or keep their crypto investments. Financial firms have convinced the SEC that certain crypto products, like digital wallets and spot Bitcoin investment funds, should not be included in the SEC’s cryptocurrency reporting rules.
Regulatory and Industry Response
Despite the initial controversy, the SEC appears to be working with the industry to refine the regulations. Industry experts, such as Aaron Jacob from TaxBit, have expressed optimism about the SEC citing the approval of spot Bitcoin products, making traditional financial institutions eager to engage in the crypto industry.
After much pressure from financial firms, the US Congress tried to get the SEC to reverse its Staff Accounting Bulletin 121 (SAB 121). The House and Senate voted to reverse the SEC’s SAB 121 guidance. However, President Biden vetoed the change, so the SEC’s original guidance remained. Even though the complexity of the regulation is still there, the SEC seems to now be working with the crypto industry to improve the guidance.
Eleanor Terrett, a Fox journalist, reacted to the news as she posted on her X page, questioning whether this development shows that the SEC is now realizing its need to soften the SAB 121 requirement for banks and brokerages. She further speculated if this was a reaction to Congress’s campaign for change.
Thus, the SEC’s decision to ease crypto reporting requirements for banks and brokerages seems like good news for the crypto industry. It will help increase the adoption of digital assets and integrate them with traditional currencies, which could also improve their usage. With this development, crypto could be widely accepted and used for everyday purchases.
SEC Eases Crypto Reporting Requirements for Banks and Brokerages
