• The SEC has supplied steerage to permit banks to get round SAB 121 cryptocurrency custody guidelines.
• Banks can now provide custody providers for crypto belongings by assembly sure regulatory circumstances.
• The transfer opens the door to establishments taking custody of crypto belongings, however raises equity considerations for crypto-native firms like Coinbase.

The U.S. Securities and Alternate Fee (SEC) has supplied new tips that would permit banks to supply cryptocurrency custody providers with out complying with strict accounting necessities underneath Employees Accounting Bulletin No. 121 (SAB 121).

SEC Chief Accountant Paul Manter introduced the brand new tips in a speech on Sept. 9, paving the way in which for banks to enter the digital asset market.

Background of SAB 121

SAB 121, launched by the SEC in 2022, requires publicly traded firms to record digital belongings they maintain for purchasers on their steadiness sheets. This regulation poses dangers for banks, as they might classify prospects as unsecured collectors within the occasion of a custodian's insolvency.

The rule has left many banks unable to supply crypto custody providers attributable to extra capital necessities and regulatory hurdles.

Problem Legislative Measure SAB 121

In Could 2024…

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