U.S. Banks Urgently Seek Crypto Guidelines Adjustment to Embrace Spot Bitcoin ETFs
Financial banks in the United States have submitted a formal letter to the U.S. Securities and Exchange Commission (SEC) requesting a revision to the existing guidelines on cryptocurrencies. If the request is approved, these financial institutions will be able to take advantage of the thriving market for exchange-traded funds (ETFs) focused on Bitcoin.
The current regulations, known as Staff Accounting Bulletin 121 (SAB 121), were implemented by the SEC in April 2022. SAB 121 specifies that financial companies must treat any investments in cryptocurrencies as liabilities on their balance sheets. This means that banks need to allocate additional assets of equal value to protect their customers from potential losses.
Due to the requirements laid out in SAB 121, many financial institutions have struggled to offer cryptocurrency-related products to their customers. The additional capital needed to comply with these regulations makes it costly for companies to provide these services.
In an effort to promote the adoption of cryptocurrencies, a coalition of trade groups, including the American Bankers Association, the Bank Policy Institute, the Financial Services Forum, and the Securities Industry and Financial Markets Association, have jointly written a letter to the SEC. The letter expresses their concerns about the current regulations and requests modifications to SAB 121.
The trade group’s letter emphasizes the importance of excluding certain assets from the strict regulatory framework imposed by the SEC. This would enable U.S. banks and other financial organizations to easily access traditional assets stored on the blockchain, such as tokenized assets. Additionally, they should have the ability to offer SEC-approved financial products, like the spot Bitcoin ETF.
Public data indicates that financial companies offering spot Bitcoin ETFs have already attracted significant investment, with U.S. investors contributing as much as $12.8 billion.
Tags: Bitcoin (BTC), Regulation, United States
