Fed Chairman Powell Reiterates: Custodial Assets Are Not on the Balance Sheet
Federal Reserve Chairman Jerome Powell testifies before the U.S. House Financial Services Committee, and Congressman Josh
Gottheimer questions him about the U.S. SEC’s Staff Accounting Bulletin (SAB) 121. The bulletin requires banks to include custodial digital assets on their balance sheets, which significantly increases the cost of providing digital asset custody services.
Gottheimer cited Powell’s previous statement that custodial assets are not on the balance sheet and have always been so. Powell generally confirmed this position but did not comment on the U.S. SEC’s policy, saying that this is the purview of the U.S. SEC.
Critics believe that SAB 121 weakens banks’ ability to provide safe digital asset custody, pushes these services to less regulated entities, and increases consumer risks. Lawmakers proposed to overturn SAB
121, citing its negative impact. Although the U.S. Congress passed the first standalone crypto legislation to overturn SAB 121, President Biden vetoed the bill, emphasizing the need to establish a digital asset regulatory framework.
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