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Financial advocacy organizations are urging the SEC to amend current accounting rules that increase the financial burden on American banks managing crypto assets for clients.
The call for change is underlined by bipartisan efforts from Congress members, who also advocate for revocation of these accounting standards. A consortium of industry groups, including the American Bankers Association and the Securities Industry and Financial Markets Association, formally addressed the SEC in a letter, as revealed by Bloomberg, requesting specific alterations to the regulations.
Under the current guidelines, public entities, such as banks, must report cryptocurrencies in their custody as liabilities, requiring them to reserve equivalent assets to safeguard against potential losses and meet capital requirements.
The coalition’s proposals to the SEC include the removal of certain assets from the broad definition of cryptocurrencies, specifically those traditional assets that are documented or transferred via blockchain, such as tokenized deposits, and tokens that are part of SEC-sanctioned products, such as spot Bitcoin ETFs.
The proposal also suggested that regulated banking institutions be exempt from the obligation to list crypto holdings as liabilities on their balance sheets while still mandating the disclosure of cryptocurrency-related operations in their financial reports.
Read More: Finance groups urge SEC to revise crypto custody accounting rules
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