Home Bitcoin News Major U.S. Banks Lobby SEC for Role in Bitcoin ETF Custodianship

Major U.S. Banks Lobby SEC for Role in Bitcoin ETF Custodianship

Bitcoin ETF

In a bold move echoing the changing landscape of financial markets, prominent U.S. banking leaders have banded together to petition the U.S. Securities and Exchange Commission (SEC) for involvement in the custodianship of Bitcoin exchange-traded funds (ETFs). In a joint letter dated Valentine’s Day, the industry heavyweights addressed SEC Chairman Gary Gensler, urging reconsideration of a 2022 law governing crypto custodianship, known as SAB No. 121. The proposed adjustments aim to accommodate the approval of spot market BTC ETFs, reflecting the evolving dynamics of the digital asset space.

SAB No. 121, introduced in 2022, mandates entities safeguarding digital assets to reflect them on their balance sheets at fair value. However, banking institutions argue that this regulation impedes their ability to actively participate in the burgeoning cryptocurrency market. The Bank Policy Institute American, along with the Bankers Association, the Financial Services Forum, and the Securities Industry and Financial Markets Association, assert that SAB No. 121 poses significant challenges for both banking organizations and investors.

Central to their concerns is the on-balance sheet requirement of SAB No. 121, which the associations contend could deter highly regulated banking entities from offering scalable custodial solutions for digital assets. They emphasize that this requirement, combined with the broad definition of ‘crypto asset,’ stifles the development of responsible use cases for distributed ledger technology (DLT) within banking organizations.

In response, the coalition proposes regulatory amendments aimed at easing the burden on banking organizations while upholding transparency and investor protection. They advocate for a narrower definition of “crypto asset” and suggest exempting banking institutions from the on-balance sheet treatment, while maintaining disclosure requirements. This, they argue, would alleviate concerns without compromising the objectives of SAB No. 121, ensuring adequate disclosures to investors while fostering innovation in the digital asset space.

The implications of this lobbying effort extend beyond regulatory compliance. The integration of traditional banking institutions into the cryptocurrency ecosystem heralds a new era of mainstream acceptance and adoption. By seeking a stake in Bitcoin ETF custodianship, U.S. banks signal their recognition of the growing significance of cryptocurrencies as legitimate investment assets.

The collaborative approach taken by these banking leaders underscores the importance of industry-wide cooperation in navigating the complexities of regulatory frameworks surrounding digital assets. As the landscape continues to evolve, partnerships between regulatory bodies and financial institutions will be pivotal in fostering a conducive environment for innovation and growth.

In the wake of this development, market observers anticipate heightened interest and participation in Bitcoin ETFs, potentially driving increased liquidity and mainstream acceptance of cryptocurrencies as part of diversified investment portfolios. Moreover, the proposed regulatory adjustments could pave the way for broader adoption of distributed ledger technology across various sectors, unlocking new avenues for efficiency and transparency in financial markets.

As the dialogue between regulatory authorities and industry stakeholders evolves, the trajectory of cryptocurrency regulation will undoubtedly shape the future of finance. With U.S. banking giants advocating for a seat at the table, the stage is set for a transformative shift in how digital assets are perceived, regulated, and integrated into the global financial ecosystem.

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Pankaj K

Pankaj is a skilled engineer with a passion for cryptocurrencies and blockchain technology. With over five years of experience in digital marketing, Pankaj is also an avid investor and trader in the crypto sphere. As a devoted fan of the Klever ecosystem, he strongly advocates for its innovative solutions and user-friendly wallet, while continuing to appreciate the Cardano project. Like my work? Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

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