US banking giants write a joint letter to the US Securities and Exchange Commission (SEC) calling for the management of spot Bitcoin (BTC) Exchange Traded Funds (ETF).
The letter, sent on Valentine’s Day by four industry leaders, addresses SEC Chairman Gary Gensler and asks him to amend a law passed in 2022 (SAB No. 121) that would require management of cryptocurrencies in light of several important developments, such as the approval of spot market BTC ETFs.
According to Thomson Reuters, SAB No. 121 forces entities that protect digital assets to present them at fair value on their balance sheets.
However, the Bank Policy Institute American, the Bankers Association, the Financial Services Forum and the Securities Industry and Financial Markets Association all say SAB No. 121 hinders their ability to participate.
“Since SAB 121 was issued in 2022, associations have expressed their concerns about the bulletin to the Commission both in writing and in meetings with Commission staff.
The primary concern identified and discussed is how the balance sheet requirement of SAB 121 will negatively impact U.S. banking organizations and investors due to associated prudential implications.
The associations have underlined that the on-balance sheet treatment will deter highly regulated banking organizations from offering a custody solution for digital assets on a large scale.
Furthermore, the associations have emphasized that the on-balance sheet requirement, coupled with the overly broad definition of “crypto assets” in SAB 121, will have a chilling effect on the ability of banking organizations to develop responsible use cases for distributed ledger technology (DLT) . ) wider.”
As a solution, the groups propose narrowing the definition of “crypto assets” and exempting banking organizations from the obligation to list the assets on the sheet, but maintaining disclosure requirements.
“Exempting banking organizations from on-balance sheet treatment, but requiring them to make certain disclosures about their digital activities, would address banking organizations’ concerns without undermining the purpose of SAB 121, which is to promote disclosure to investors. ”
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Featured image: Shutterstock/Art Furnace
